Carnival raises hostile offer in final attempt to break up Royal merger

Carnival Corporation yesterday raised its hostile offer for P&O Princess in a final attempt to break up the UK cruise group's pre-arranged merger with Royal Caribbean.

The US cruise giant took its new bid direct to Princess's shareholders and said it had softened the offer terms to avoid paying a $1bn (£700m) poison pill if it breaks up the joint venture between Princess and Royal. Carnival's all-share bid, which values each Princess share at 515p, remains conditional only on regulatory clearance, the group said.

Carnival said it would avoid paying the poison pill by delaying the completion of its takeover of Princess until January 2003.

Princess's chief executive Peter Ratcliffe said earlier that the UK cruise ship operator could legally terminate the joint venture after this date as long as certain commercial benchmarks had not been met.

In a document due to be posted to Princess shareholders this week, Carnival again called on investors in the UK group to propose that an extraordinary meeting to approve the Royal merger be adjourned. The meeting is scheduled for February. Analysts said the US company should have done enough to convince Princess's shareholders that its bid is sincere and not a spoiling tactic to prevent its two main rivals from joining forces.

Princess's directors last night said they would consider Carnival's new proposal before deciding how to proceed.

Micky Arison, the chairman and chief executive of Carnival, said: "We believe we have addressed shareholders' concerns about the conditionality and deliverability of our original offer. Our revised offer is clearly superior, credible and deliverable. Recent developments demonstrate that the Royal Caribbean proposal is far from being a bird in the hand."

The revised offer came just one day after the Government referred the merger with Royal to the Competition Commission.

Carnival's offer of 0.2684 Carnival shares for each Princess share currently values the UK company at £3.6bn.