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Cruise line puts itself up for auction

Posted: Thursday, December 20, 2001

LONDON -- P&O Princess Cruises PLC has changed course and put itself up for auction, announcing Wednesday it would give shareholders time to study a $4.4 billion takeover bid from Carnival Corp. that it had spurned in favor of a merger with Royal Caribbean Cruises Ltd.

The winners in this three-way tussle will be the world's biggest cruise ship operator. All three companies offer cruises to Alaska.

In a concession to Miami-based Carnival, Princess has scheduled a shareholders' meeting for Feb. 14, six weeks after the company's board plans to issue a circular urging investors to approve the planned merger with Royal Caribbean.

If Carnival made a ''credible and superior'' offer by Jan. 18, then shareholders would have sufficient time before their meeting to decide between the two alternatives, Princess said.

Carnival's chairman and chief executive, Micky Arison, had insisted that Princess executives postpone a planned January meeting for shareholders to approve the deal with Royal Caribbean.

''We must be absolutely certain that we are not jeopardizing our merger with Royal Caribbean, a committed partner, in return for a proposal which simply turns out to be a spoiling tactic designed to disrupt the creation of significant value for P&O Princess' shareholders,'' said Princess chief executive Peter Ratcliffe.

''The timetable we have set in place today both honors our agreement with Royal Caribbean and still gives time for Carnival to put forward a credible, deliverable and more valuable transaction,'' he said.

Carnival, in a response, denied that it was trying to torpedo the merger between Princess and Royal Caribbean Cruises. It said it was trying only to establish ''a level playing field'' so that Princess shareholders ''can then consider both proposals on the basis of value.''

Princess at first rejected Carnival's bid -- even though it is larger than the $3 billion merger with Royal Caribbean -- because executives believed regulators would reject the bid due to antitrust concerns. Carnival is currently the world's largest cruise operator.

Princess' proposed merger with Royal Caribbean would create a combined business worth $6 billion and overtake Carnival in size. Miami-based Royal Caribbean is the second-largest cruise line operator, while Princess, headquartered in London, is No. 3.

Britain's Takeover Panel said it probably wouldn't impede the merger because the deal isn't an acquisition. Rather, the merger is designed to leave both Princess and Royal Caribbean intact, each with its own separate stock listing.

The Department of Trade and Industry still has to decide whether to refer the planned merger to a different regulatory agency, the Competition Commission. The DTI will decide Jan. 8 at the earliest.

Shares of Royal Caribbean fell 66 cents, or 4.6 percent, to $13.59 in morning trading Wednesday on the New York Stock Exchange. The shares have fallen 17 percent since the Carnival deal was revealed Sunday.

Shares of Carnival fell 20 cents to $27.02 on the NYSE, where Princess' U.S. traded shares rose 52 cents to $21.85.



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