Peninsular and Oriental (P&O), the British shipping and property group with a range of interests in south China, has announced a GBP410 million (about HK$4.97 billion) merger of its European ferry operations with Stena Line, the Swedish ferries and hotels group.
The deal, which was widely expected, is designed to create a company able to compete on a more even footing with Eurotunnel, the Channel tunnel operator which is the dominant player in the cross-Channel market.
P&O said in August if the two groups were merged they would control 41 per cent of the car ferry market on the competitive Dover-Calais route, and 40 per cent of the freight route.
This compared with Eurotunnel's 41 per cent share of the ferry market and 44 per cent of the freight market.
P&O shares soared to a new high of 657 pence yesterday, up 31p on opening, before stabilising at 634p.
'Once the GBP12 billion Eurotunnel was dumped into the ferry market, it was clear there would have to be rationalisation. This became particularly true when Eurotunnel decided not to pay interest [on its GBP8.8 billion debt] and to buy its way into the market by slashing fares,' P&O chairman Lord Sterling said.