LONDON - Cruise ship owner P&O Princess PLC has spurned a third takeover bid from Carnival Corp., but that didn't stop Carnival's chief executive from meeting Monday with Princess' investors, hoping to spark a shareholder mutiny that would help him capture his smaller rival's fleet. <br>
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Princess' board turned down Carnival's latest offer on grounds similar to its rejection of Carnival's previous two bids -- that it was too small and too likely to run afoul of regulatory concerns. Princess continued to push instead for its own planned merger with Royal Caribbean Cruises Ltd. <br>
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"We consider that the Royal Caribbean transaction creates more value and is more deliverable than Carnival's latest takeover proposal," Princess chief executive Peter Ratcliffe said. <br>
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Carnival, the world's largest cruise operator, launched its original bid for Princess after the London-based business announced its proposed union with No. 2 Royal Caribbean. Princess would own 50.7 percent of the new group -- or $3 billion of its total equity value -- with Royal Caribbean taking the remaining 49.3 percent. <br>
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All three companies are eager to cut costs in the wake of a plunge in business after the Sept. 11 terrorist attacks. <br>
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Aiming to torpedo a deal between Princess and Royal Caribbean, Carnival made a third takeover bid Wednesday, offering a mixture of cash and shares worth about $5.1 billion. Carnival revised its earlier offer to make it conditional only upon the clearance of regulatory hurdles. <br>
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Carnival also said it would postpone completion of its takeover until January to avoid triggering any financial penalties, or "poison pills," that might arise from a change in control of a yearlong joint-venture Princess and Royal Caribbean have set up in southern Europe. Investment Bank Morgan Stanley estimates that these penalties could total as much as $509 million, in addition to a $62.5 million cancellation fee for the venture. <br>
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The Princess board has not given a "substantive rationale" for its contention that Carnival's offer faces tougher regulatory obstacles, Carnival said in a statement. A Royal Caribbean-Princess combination would leapfrog Carnival as the world's largest cruise operator, while a Carnival takeover of Princess would cement its No. 1 spot. <br>
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However, even if Carnival cleared all regulatory obstacles, Princess argued that its shareholders would suffer in a buyout because unlike Princess, Miami-based Carnival doesn't list its shares on the London Stock Exchange. <br>
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Many British institutional investors prefer to hold shares in British blue chips, and Princess said investors might flood the market with the Carnival shares they receive in exchange for their Princess shares. Such a sell-off would punish any investors who held on to their new Carnival stock by driving down its value, Princess said. <br>
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Under the planned merger with Royal Caribbean, Princess' shares would continue to be traded in London. <br>
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Princess is pressing ahead with a planned Feb. 14 shareholders' meeting at which investors will vote on the company's proposed merger with Royal Caribbean. <br>
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Princess' merger strategy hit rough water last week when officials referred the proposed deal merger with Royal Caribbean to Britain's competition watchdog agency, the Competition Commission, for review. Princess reiterated its opinion that it still would win regulatory approval for the merger. <br>
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Carnival chief executive Micky Arison has said shareholders should not have to vote on the merger until all regulatory approvals are in place. <br>
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Having failed to persuade Princess' board to postpone the meeting, Arison arrived in London and began meeting on Monday with individual Princess investors to try to overcome opposition to his bid. He planned to spend the rest of the week here lobbying shareholders, a Carnival spokesman said. <br>
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Princess shares slipped 0.9 percent to 405.25 pence ($5.75) each in afternoon trading on the London Stock Exchange. <br>
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On the New York Stock Exchange, shares of Carnival fell 62 cents to $26.26 at midday, while Royal Caribbean shares fell 41 cents to $17.77 and Princess' U.S.-traded shares fell 25 cents to $23. <br>
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