Key investor in P&O Princess backs Royal Caribbean

The battle for P&O Princess Cruises yesterday looked to have tipped in its favour after one of its leading shareholders said it would back an agreed £5bn merger with Royal Caribbean.

Toby Nutt, a director at Jupiter Asset Management, which holds a 3.5 per cent stake in Princess, said that unless Carnival Corporation increased its £3.2bn hostile bid for the UK cruise ship operator he would vote for the Royal Caribbean deal. Mr Nutt, who is the first major shareholder in Princess to comment publicly, said Carnival had to increase its offer to over 600p a share to change his mind. Jupiter is one Princess's five largest stakeholders.

"We haven't really seen anything to show that Carnival is serious in their intent and they're not just trying to undermine the merger," Mr Nutt said. Peter Ratcliffe, Princess's chief executive, has given Carnival until Friday to increase its bid, which values the UK company at around 450p a share, and prove that its overtures are not merely a "spoiling tactic".

The US cruise market leader, which made a preliminary offer for Princess just before Christmas, has refused to increase its bid without more information about the penalty cost of breaking up the Royal Caribbean merger. A "poison pill" relating to a joint venture agreement in southern Europe would cost Carnival up to $1bn (£694m) if its bid were to succeed before 1 January 2003.

Mr Nutt pointed out that Carnival, which would be knocked off its number one slot if the Princess/Royal Caribbean merger goes ahead, could have clinched a deal at any stage since Princess was demerged from its parent, P&O, in October 2000. Princess's management has recommended that its shareholders vote for the proposed merger on the grounds of "value and deliverability" at an extraordinary meeting scheduled for 14 February.

While Carnival has indicated that it is unwilling to adhere to an artificial deadline set by Princess, it has hinted that it may come back to the bidding table. Princess's shares rose 3.5p to 406.5p.