Bid costs hit £35m at P&O Princess

P&O Princess Cruises, the UK passenger ship company that has spent the past 11 months embroiled in a two-way bid battle, revealed yesterday that the cost of its army of advisers had soared to $55m (£35m).

The group, which is in the final throes of a takeover process that will see it emerge as part of the world's biggest cruise company, said the bill would be incurred if both deals fell through. Its would-be suitors are Carnival Corporation and Royal Caribbean.

Peter Ratcliffe, P&O Princess's chief executive, said the fee costs had escalated from $35m on the protracted nature of both deals, which have been subject to lengthy competition inquiries in Europe and the US.

If the UK company ends up being taken over by Carnival, the total bill to its shareholders will be $117.5m, including a $62.5m break-fee that will be payable to Royal Caribbean, its original merger partner.

The transaction costs cover fees payable to a string of advisers, including economists, investment bankers, lawyers and spindoctors. About $30m alone is thought to be payable to the group's lawyers, Sullivan & Cromwell in the US and Freshfields in London.

They emerged as P&O Princess raised its full-year profit forecast for 2002 and said it was upbeat about prospects for 2003. Earnings per share were likely to be at the top end of forecasts of 42 to 44 cents per share, up from expectations of 28 cents in February. Mr Ratcliffe said reductions in group yields could be as low as 4 per cent. "How many other leisure companies have gone through September 11 and only reduced pricing by 4 per cent?" he said. The group added that a meeting with Carnival to discuss a possible dual-listed combination would take place "shortly".