P&O Princess-Royal merger OK

P&O Princess Cruises has won permission to steam ahead with its £5.87bn merger with Royal Caribbean Cruises by Trade Secretary Patricia Hewitt. She accepted the findings of the Competition Commission that the merger 'could not be expected to operate against the public interest' due to the 'existence of a wider holiday market and the availability of cruises of types other than those operated by Princess and Royal Caribbean'.

Approval will be a severe blow to rival US company Carnival, which has tabled a hostile bid of £4.3bn for P&O Princess, whose shares rose 7p to 433p.

Carnival is expecting a decision on its bid from the European Competition Commissioner Mario Monti on 19 August and has not been deterred by indications from Brussels that it would be required to make significant disposals to win approval.

P&O shareholders will now be waiting to see what the America's Federal Trade Commission does. P&O chief executive Peter Ratcliffe said: 'We are pleased with the decision to approve our agreed combination with Royal Caribbean. We continue to work with the Federal Trade Commission in the United States as they conduct their review of the transaction.'