P&O ready to make bid for Cunard

P&O, THE SHIPPING and construction group, is preparing to make an offer for its smaller rival Cunard, owner of the QE2 luxury liner.

The troubled cruise line is expected to be put up for sale if takeover talks succeed between its equally battered parent, Trafalgar House, and Norwegian shipbuilding and engineering group Kvaerner.

Erik Tonseth, Kvaerner's chief executive, is expected to decide this week on whether to make a pounds 900m bid, worth between 50 and 55p per Trafalgar share, after surprising the market with news of the talks last Tuesday.

Sources close to Kvaerner - which last year lost a hostile pounds 360m bid for UK construction and engineering firm Amec - said it was mainly interested in Trafalgar's engineering and contracting businesses and would want to dispose of its housebuilding, commercial property and shipping divisions.

Asked at the weekend if he would be interested in buying, Lord Sterling, P&O chairman, said that if Cunard were offered, "We would be prepared to look at it, at a price." P&O's two biggest rivals, Carnival and Royal Caribbean, might also be interested.

Sale of Trafalgar would be embarrassing for Hong Kong's powerful Keswick family, whose property arm, Hongkong Land, rescued the group in 1992. It would, however, mark an end to a disastrous involvement, which has seen more than pounds 200m pumped into a black hole - losses reached pounds 321m last year.

Cunard has long been up for sale, and any deal now could founder on the rocks of P&O's shareholders, who are already disappointed by its poor financial performance and want to avoid any further problems.

"It would be another nail in the P&O coffin," said one disgruntled fund manager. "There's probably not much we can do about it right now, though. They could probably get a bank to lend them the money without any equity backing." But it would hit the shares and make investors far less likely to respond the next time they are called upon.

Although Cunard has a well-known brand name, particularly in Britain and the eastern US, its assets are considered by many observers to be second-rate, out of date and accident-prone.

The flagship QE2 had a disastrous voyage 15 months ago, when it set sail in the middle of a refit, resulting in pounds 8.4m of refunds to angry passengers. Last week, more bad press came when fire broke out on the liner Sagafjord, leaving it adrift in the South China Sea with 500 people on board.

Industry insiders think Cunard's eight ships would probably fetch less than pounds 200m, and another pounds 1bn would have to be pumped in to bring them up to rivals' standards.

Its big advantage over P&O is its brand name and market share, plus the economies of joint marketing and administration.

However, P&O's shareholders fear that a Cunard bid would only delay long-promised returns from it own upgraded fleet. P&O's flagship Oriana and a small squadron of super luxury liners in the Princess class are only now starting to contribute to the bottom line. Re-equipping Cunard could add three years to the process.

"They keep telling us that things will get better soon, but buying Cunard would put 'soon' back a number of years," said one fund manager.

Start your day with The Independent, sign up for daily news emails
News
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
health
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn