Carnival claims 30% backing as Princess rejects new offer

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The Independent Online

P&O Princess, the cruise ship operator, yesterday conceded that a revised takeover bid from Carnival was pitched at the right price but continued to reject its US rival's approaches as a tactic to destroy its agreed merger with Royal Caribbean.

Carnival, the world's largest cruise operator, said Princess's rejection of its £3.8bn offer by the Princess management was predictable, adding that support for its bid was gaining momentum among Princess's shareholders.

It claimed to have the written support of 30 per cent of Princess's investor base for a move to defer the shareholder vote on the proposed Royal Caribbean deal, which is slated for 14 February.

Peter Ratcliffe, Princess's chief executive, said: "For the first time we have a price that realistically values this company for those who wish to cash out of both the company and the industry."

But he added that Carnival's proposals presented "significantly greater regulatory hurdles" which the offer contained no commitment to resolving, and the company had allowed itself plenty of opportunities to wriggle out of any deal.

While Princess's shareholders may support a deal with Carnival, management cannot solicit any new bid under the terms of its signed agreement with Royal Caribbean. It will have to pay a £62m break fee if it walks away from the deal. It also risks being jilted by Carnival, which has as much to gain by maintaining the status quo as it does by buying Princess.

"The fundamental issue is what is the real motivation of Carnival," said Mr Ratcliffe.

Carnival rejected as nonsense suggestions that its bid was not serious, and said it had already filed draft papers with European competition authorities. It had since been engaged in a question-and-answer exchange and expects to file formal papers shortly.

A merger of Carnival and Princess would appear especially problematic in Europe, creating a company that would dominate the cruise market. By contrast, Princess is confident that a tie-up with the much smaller Royal Caribbean would sail through regulatory hearings.

Shares in Princess sank 6.5p to 403p yesterday.