Posted on: Thursday, December 20, 2001

Princess shareholders to compare merger bids

By Bruce Stanley
Associated Press

LONDON — P&O Princess Cruises PLC has changed course and put itself up for auction, announcing yesterday it would give shareholders time to study a $4.4 billion takeover bid from Carnival Corp. that it had spurned in favor of a merger with Royal Caribbean Cruises Ltd.

The winners in this three-way tussle will be the world's biggest cruise ship operator.

In a concession to Miami-based Carnival, Princess has scheduled a shareholders' meeting for Feb. 14, six weeks after the company's board plans to issue a circular urging investors to approve the planned merger with Royal Caribbean.

If Carnival made a "credible and superior" offer by Jan. 18, then shareholders would have sufficient time before their meeting to decide between the two alternatives, Princess said.

Carnival's chairman and chief executive, Micky Arison, had insisted that Princess executives postpone a planned January meeting for shareholders to approve the deal with Royal Caribbean.

"We must be absolutely certain that we are not jeopardizing our merger with Royal Caribbean, a committed partner, in return for a proposal which simply turns out to be a spoiling tactic designed to disrupt the creation of significant value for P&O Princess' shareholders," said Princess chief executive Peter Ratcliffe.

"The timetable we have set in place today both honors our agreement with Royal Caribbean and still gives time for Carnival to put forward a credible, deliverable and more valuable transaction," he said.

Carnival, in a response, denied that it was trying to torpedo the merger between Princess and Royal Caribbean Cruises. It said it was trying only to establish "a level playing field" so that Princess shareholders "can then consider both proposals on the basis of value."

Princess at first rejected Carnival's bid — even though it is larger than the $3 billion merger with Royal Caribbean — because executives believed regulators would reject the bid because of antitrust concerns. Carnival is currently the world's largest cruise operator.

Princess' proposed merger with Royal Caribbean would create a combined business worth $6 billion and overtake Carnival in size. Miami-based Royal Caribbean is the second-largest cruise line operator, while Princess, headquartered in London, is No. 3.

Britain's Takeover Panel said it probably wouldn't impede the merger because the deal isn't an acquisition. Rather, the merger is designed to leave both Princess and Royal Caribbean intact, each with its own separate stock listing.

The Department of Trade and Industry still has to decide whether to refer the planned merger to a different regulatory agency, the Competition Commission. The DTI will decide Jan. 8 at the earliest.