PSA offer for P&O recommended

Recommended cash acquisition of The Peninsular and Oriental Steam Navigation Company (" P&O ") by PSA Venture (UK) Limited (the ."offeror"), a wholly owned subsidiary of PSA International Pte Ltd ("PSA")

Summary

The Board of Directors of the Offeror and P&O today announce that they have reached agreement on the terms of a recommended cash offer for the acquisition of the entire issued and to be issued Deferred Stock of P&O (the "Offer").

The Offer values each unit of Deferred Stock at 470 pence, valuing the entire existing issued Deferred Stock of P&O at approximately £3,545 million. A Loan Note Alternative will also be provided to Deferred Stockholders as part of the terms of the Offer.

At completion of the Offer, the operations of P&O will be merged with those of the Offeror.sparent, Singapore based PSA, creating one of the world.s largest port operators. The Offeror believes that the Offer represents compelling value for all P&O Deferred Stockholders equating to:

(i) a premium of approximately 55 per cent. to the Closing Price of 303.5 pence for each unit of Deferred Stock on 27 October 2005, the last business day prior to the speculation regarding a possible offer for P&O;

(ii) a premium of approximately 6 per cent. to the price payable for each unit of Deferred Stock under the Thunder Offer; and

(iii) a 2004 price earnings multiple of 26.0x.

Proposals are being made by the Offeror to the holders of Concessionary Stock on terms similar to those available under the Thunder Offer, including providing them with the opportunity to continue to enjoy concessionary fares on P&O Ferries with the Offeror acquiring the corresponding units of Concessionary Stock.

Proposals are being made by the Offeror to holders of Preferred Stock on terms similar to those available under the Thunder Offer.

The conditions to the Offer are set out in Appendix I. In particular, PSA would like to draw attention to the 50 per cent. acceptance condition. 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 Offers (constituting the Offer, the Concessionary Offer and the Preferred 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 unanimously recommend the Offers and have withdrawn their recommendation of the Thunder Offer.

Mr Fock Siew Wah, Chairman of PSA, said: .I strongly believe that the combination of PSA and P&O, two great companies with complementary strategic, operational and geographical growth positions, will create the strongest business platform that will enable us to serve our global customers better and deliver significant value in the future to our stakeholders. We will have an enlarged port group that will have the financial resources, scale and global connectivity to compete even more effectively and successfully in the port marketplace.

It is our intention to integrate quickly in order to add value to the businesses of the combined group, including ferries. We also recognise the importance of P&O 's workforce to our future success and look forward to welcoming them into the enlarged Group.

We are also pleased that Robert Woods, CEO of P&O, has agreed to stay on in the enlarged group to ensure a smooth transition. Robert will be CEO of the UK businesses and Chairman of the Ferries Division..

Sir John Parker, P&O's Chairman said: .PSA's Offer to Deferred Stockholders of 470p represents a 6% increase over Thunder's offer of 443p. With regard to deliverability, PSA has given us undertakings to meet any requirements of the regulatory authorities. PSA will be a strong owner of P&O's businesses. We welcome their statement regarding the role P&O.s management and employees will continue to play in the ongoing success of the new group across all business divisions..

PSA is being advised on the Offers by UBS Investment Bank and Goldman Sachs International.This summary should be read in conjunction with, and is subject to, the full text of the attachedRule 2.5 announcement. The Offers are conditional on the satisfaction of the conditions and terms set out in Appendix I of the Rule 2.5 announcement.