Recommended acquisition of P&O by Thunder

The Boards of the Offeror and P&O announce the terms of a recommended cash offer under which the Offeror will acquire all of the issued and to be issued Deferred Stock of P&O (the 'Offer').

It is intended that the Offer be implemented by way of a scheme of arrangement under section 425 of the Companies Act (the 'Scheme').

Under the terms of the Offer, Deferred Stockholders will receive 443 pence in cash for each unit of Deferred Stock, valuing the existing issued Deferred Stock of P&O at approximately £3,326 million.

The value delivered to Deferred Stockholders through the Offer represents:


• a premium of approximately 46 per cent. to the Closing Price of 303.5 pence for each unit of Deferred Stock on 27 October 2005 (being the last business day prior to recent speculation regarding a possible offer for the Company); and


• a 2004 price earnings multiple of 24.5x.

A Loan Note Alternative will also be provided as part of the terms of the Offer.

Following the Effective Date, the Preferred Stock of P&O will be cancelled and the capital paid up on it (and any accrued dividends) returned to its holders.

Proposals will be made by the Offeror to the holders of Concessionary Stock which will include providing them with the opportunity to continue to enjoy concessionary fares on P&O Ferries with the Offeror acquiring the corresponding units of stock in the Company.

The directors of P&O, who have been so advised by Citigroup Global Markets Limited ('Citigroup') and N M Rothschild & Sons Limited ('Rothschild'), consider the terms of the Offer to be fair and reasonable. In providing advice to the directors of P&O, Citigroup and Rothschild have taken into account the commercial assessments of the directors of P&O.

Accordingly, the directors of P&O intend to recommend unanimously that P&O Stockholders vote in favour of the Offer at the appropriate meetings.

The Offeror has received irrevocable undertakings from the P&O directors and letters of intent from certain stockholders to vote in favour of Offer in respect of approximately 18.6 per cent. of P&O's issued Deferred Stock.

Commenting on the Offer, Sultan Ahmed Bin Sulayem, the Chairman of the Offeror and DP World, the global ports business of the Offeror Group said:

'DP World's acquisition of P&O will create a top three global ports operator with the
scale and network to service an increasingly global and consolidating customer base. The unparalleled strategic fit of the two companies' complementary global ports portfolios and the strong development pipeline, including London Gateway, is particularly compelling. In addition, DP World regards the management and employees of P&O as key to the ongoing success of the combined entity. It is our current intention to keep P&O's headquarters in London. DP World looks forward to growing the combined
businesses for the benefit of employees, customers, and its shareholder.'

Sir John Parker, the Chairman of P&O, said: 'We have today announced that the Board of P&O is recommending DP World's all cash offer of 443 pence per share, which values the existing issued deferred stock of P&O at £3.3 billion. It represents a premium of 46 per cent. to the closing price of 303.5 pence on 27 October 2005 which was the last trading day prior to any market speculation, and represents 24.5x 2004 earnings.

'DP World's offer recognises that P&O is a unique brand with an exceptional footprint of international port assets. P&O is one of the top four international port operators with 29 container terminals and operations in 18 countries across the globe, generating 80 per cent. of the Group's total profits. The Board believes this all cash offer is in the best interests of the deferred stockholders who will receive a substantial return on their investments.

'P&O employees will also benefit. DP World have made clear they regard the management and employees as key to the ongoing success of the combined entity and that they recognise the importance of P&O's ferries and properties divisions, as well as ports. I am pleased to say that it is intended that Robert Woods, Chief Executive of P&O, continues to head up the P&O business and for P&O to remain headquartered in London.'

'Putting P&O and DP World together will create one of the top three leading ports groups in the world.'