Carnival Share Structure15 Apr 2023 13:56
2 entities with 1 purpose
Carnival's business structure is unusual in that it incorporates two separate legal entities that nevertheless function as a single economic entity. Carnival Corporation has common stock under the ticker CCL on the New York Stock Exchange (a subsidiary of Intercontinental Exchange), and that has by far the greater volume of shares changing hands each trading day.
Meanwhile, Carnival PLC has stock that primarily trades on the London Stock Exchange. However, to make things even more complicated, shares of Carnival PLC are also available on the NYSE under the different ticker symbol CUK. That means U.S. investors have easy access to two separate stocks -- both of which are tied to Carnival.
As Carnival explains it, shareholders of both entities have the same economic and voting interests. Their respective businesses are combined, and they have contractual agreements with each other to ensure that they operate in unison. Both have also paid the same dividends, prior to Carnival's recent decision to suspend payouts in light of the current economic crisis.
So why is one Carnival stock cheaper than the other?
There's one big difference between the two entities: The two stocks don't trade at the same price. Lately, shares trading under the ticker CCL have routinely traded at a premium price to those with the ticker CUK. For instance, the price difference for the shares at 2 p.m. EDT on Tuesday, April 14 was 6.7% -- Carnival Corporation fetched $12.35 per share while Carnival PLC traded for $11.57 per share.
However, that relationship hasn't always been the case. Throughout much of the early and mid-2010s, Carnival PLC was the higher-priced stock, while Carnival Corporation lagged behind.
One common explanation for the difference involves special voting rights connected to Carnival Corporation shares. As part of the 2003 merger of Carnival and P&O Princess Cruises PLC, shares of Carnival Corporation were "paired" with trust shares in a special voting trust. However, that mechanism doesn't apparently give Carnival Corporation shareholders any extra rights. Instead, it merely ensures that at meetings of the Carnival PLC entity, the views of Carnival Corporation shareholders get equal weight to those of Carnival PLC shareholders. Moreover, it wouldn't explain why the stock of one company might be higher than the other in one year, but then lower than the other in the next.
The more likely reason has to do with the two stocks' respective connections to their home markets. The stock tickered CCL is a member of the S&P 500 index, so any index funds tied to the S&P 500 have to own shares of that stock. Meanwhile, the stock tickered CUK tracks the price of the London-listed shares that are included in the U.K.'s premier FTSE 100 index. When the U.S. stock market overall looks more attractive than the U.K. market, then CCL shares will fetch a higher price. When the U.K. market is in favor, then CUK shares can take thei
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