Regulators to decide as battle for P&O becomes a two-horse race

P&O Princess Cruises's dream of becoming the world's largest cruise ship operator was dealt a blow by its own shareholders after investors ignored the board's advice and opted to adjourn a meeting convened to vote through its proposed £4.8bn merger with Royal Caribbean.

The decision to delay the extraordinary meeting was announced in the early hours of yesterday morning – some 18 hours after the shareholders' gathering began. The move clears the way for investors to consider a £3.9bn hostile takeover bid from Carnival Cruises, the US cruise giant.

Peter Ratcliffe, Princess's chief executive, was at pains to stress that the result of the fraught voting process did not alter his intention to merge with Royal. While he said he would "clearly have preferred to have the Royal transaction approved", he added that he was "okay" with the outcome. "I'm the first to understand that shareholders have their right to request more time. There is no issue there," he said.

The adjournment was a victory for Carnival, which had lobbied hard to persuade investors to back the motion, proposed at its request. Micky Arison, Carnival's chairman and chief executive, said: "Yesterday was a very strong vote for the value of our proposal. Our focus now is to get regulatory clearance."

Princess said some 253 million shares were cast in favour of the delay, with 152 million against. Analysts expressed some surprise at the relatively low turnout. Investors with just less than two-thirds of Princess's share capital voted.

While the adjournment raised the possibility that Royal may pull out of the deal, the Liberian-registered company, which was forced to delay its own EGM, was giving nothing away.

Richard Fain, the chairman and chief executive, expressed his disappointment, adding: "We have to acknowledge that a shareholders' vote is a democratic process." This represented a change of tune from earlier in the week when Mr Fain said a delay "would strike at the heart of our transaction" and warned there would be "no deals".

Major shareholders, who control more than 80 per cent of Princess's stock, denied that their decision to back the adjournment was evidence that they preferred Carnival's proposal. Graham Crerar, a fund manager at Henderson, which is Princess's largest institutional investor with more than 5 per cent of the stock, said: "Our vote was not a vote for Carnival. We are still very supportive of Princess's board." Stuart Fowler, at Axa Investment Managers, said he still preferred the Royal proposal because hewanted to retain his stake in Princess.

Mr Ratcliffe said the meeting would not be resumed until there have been "substantive changes in the facts". Princess can reconvene the EGM at any time, but must give shareholders 14 days notice. Mr Arison has asked the board to wait until both deals have been through the regulatory processes – which could take another four months.

Carnival has proposed an all-share deal, which values each Princess share at about 556p. This compares with a value of between 475p and 500p if Princess merges with Royal, analysts have estimated. Shares in Princess slipped 9p to 390p.