P&O Princess's joint venture deal with its potential merger partner, Royal Caribbean Cruises, has been slammed by independent analysts at Morgan Stanley, who claim the deal could cost P&O $500m (£350m).
The estimate is two and a half times the original valuation suggested by P&O and is a major stumbling block for the proposed £3.2bn offer for P&O by rival Carnival, the third of the world's major cruise companies.
Carnival is expected to publish more bid details this week, with shareholders hoping it will drop pre-conditions that have stopped it making an offer. The cruise company has already persuaded P&O to postpone the shareholders' meeting to consider the £7bn Royal Caribbean merger until next month. Now it is pressing for that to be put back until competition regulators can rule on whether either of the proposed deals should be allowed.
Investors in P&O have been fuming about the joint venture signed with Royal Caribbean as a condition of the two sides having talks about a merger.
The joint sales deal includes penalty clauses if P&O is taken over, which P&O originally said would cost $200m. There are other deal protection clauses which would cost about $62.5m.
But in a circular on Friday, investment bank Morgan Stanley says the potential cost to P&O of the venture could be $500m. Analyst Jamie Rollo describes the deal as a "poison pill" which "is at best extreme and at worst a straight transfer of value from P&O's shareholders to Royal Caribbean's".
Mr Rollo says: "You do not create a joint venture with yourself... Overall, it seems to be far more skewed to the interests of Royal Caribbean's shareholders than Princess's."
A spokeswoman for P&O said the deal was essential to persuade Royal Caribbean to enter merger talks with P&O. "Without the deal protection, there would be no deal and P&O's shares would be much lower."Reuse content