Carnival in hostile bid for Princess

Rebuffed, Miami-based company goes to P&O shareholders

Posted: Tuesday, December 18, 2001

MIAMI - Carnival Corp. launched a $4.4 billion hostile bid Monday to buy Britain's P&O Princess Cruises PLC, which has already agreed to a merger deal with Royal Caribbean Ltd.

Executives for Miami-based Carnival announced their effort to take the offer directly to shareholders a day after London-based Princess rejected a friendly takeover under the same terms.

Princess Cruises shares jumped 5 percent as investors anticipated a bidding war; Royal Caribbean shares plunged 11.7 percent.

Princess Cruises, which includes the Princess Tours division in Seattle, turned down the offer - even though it is $1 billion higher than Royal Caribbean's offer - because executives believe regulators would reject the bid over antitrust concerns. Carnival is the world's largest cruise operator.

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

First, he said, Carnival would submit the merger proposal to regulators so both deals could be examined. If regulators decide both combinations are possible, shareholders could then select the deal they prefer, Arison said in a conference call with analysts and reporters.

In a statement released Monday, Princess Cruises said it favors the deal with Miami-based Royal Caribbean because a combination with Carnival would be "subject to greater regulatory risk" in both the United States and Europe.

Princess and Royal Caribbean announced their plans to merge in late November in a deal valued at $3 billion. The combined company would be worth $6 billion, have 75,000 berths on 41 ships and overtake Carnival as the world's largest cruise operator.

Carnival countered by offering Princess shareholders $2.91 in cash and .1361 Carnival shares for each Princess share, for a total of about $6.56 per Princess share. In London, Princess shares closed up 5 percent at 383 pence ($5.59).

A Carnival-Princess combination would create a company with 62 ships and 88,000 berths, worth more than $18 billion.

Analysts say the Carnival offer is stronger than the Royal Caribbean deal primarily because Princess shareholders will get more for their shares.

However, Princess shareholders would maintain a controlling voting interest of 50.7 percent of the combined company under terms of the deal with Royal Caribbean, said Tim Conder, a cruise industry analyst with A.G. Edwards & Sons Inc.

The Royal Caribbean-Princess merger is set to be completed in the second quarter of 2002. Seventy five percent of the Princess shareholders must approve for it to go through.

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