Carnival forecasts £70m in savings from P&O tie-up

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The Independent Online

Carnival Corporation, the US cruise ship operator fighting a bid battle for P&O Princess Cruises, yesterday attempted to bolster its £3.5bn offer by revealing it expected cost savings of $100m (£70m).

Carnival also launched an offensive on the track record of rival suitor Royal Caribbean and its chief executive, Richard Fain, in an attempt to persuade Princess's shareholders to back its 500p-per-share proposal.

Peter Ratcliffe, Princess's chief executive, dismissed the announcement because it failed to address how Carnival's proposed offer would add "value or deliverability" for Princess's shareholders. Princess is recommending its shareholders back a pre-arranged £4.8bn merger with Royal Caribbean at an extraordinary meeting scheduled for 14 February.

Mickey Arison, Carnival's chief executive, attacked claims by Princess that a combination with Royal would create a superior company for its shareholders that could match Carnival's margins. "Since Royal Caribbean has historically underperformed, is there any reason why they will improve in the future?" he asked.

Mr Arison, whose family controls Carnival, criticised some of the market forecasts of the synergies from a Royal/Princess combination as "unrealistically high". Some analysts expect cost savings of as much as $350m.

Analysts and investors said Carnival's tactics were more likely to backfire than work in its favour, suggesting the US cruise company's attack on Royal Caribbean looked more like a ploy to spoil the merger than evidence of serious intent.

Jamie Rollo, leisure sector analyst at Morgan Stanley, called Carnival's attack on Mr Fain the "last gasp of a dying takeover bid". Simon Champion, at Deutsche, said: "These are arguments that Carnival has put forward since day one."

Separately, Princess said it had received compulsory requests from US anti-trust authorities to provide further information about its proposed merger with Royal. Princess's shares gained 3p to 389p.

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