P&O shareholders delay merger vote to consider Carnival offer

Posted 8:06AM on Friday 15th February 2002 ( 23 years ago )

LONDON - A planned merger between P&O Princess PLC and U.S. rival Royal Caribbean Cruises Ltd. hung in the balance Friday after Princess' shareholders delayed a crucial vote on the deal. Investors stalled the London-based firm's merger with Royal Caribbean so a hostile takeover bid for P&O Princess could be considered. Carnival Corp. has also tabled a bid for P&O Princess. It insists its $5.4 billion offer -- which it has sweetened three times -- is genuine despite failing to put a formal bid in writing. Miami-based Carnival is the world's biggest cruise operator with 43 ships and an estimated 27 percent share of the global market for 2002, according to U.S. brokerage A.G Edwards. It wanted the vote delayed so Princess' shareholders could properly assess its offer. A vote for an adjournment was subsequently passed at the extraordinary general meeting of P&O shareholders at London's Royal Lancaster Hotel. The meeting had been arranged by the company to approve the merger with Royal Carribean. The outcome was delayed until 5 a.m. (midnight EST) Friday morning. It took 14 hours to reach the decision to adjourn due to the volume of votes cast and a high turnout by institutional shareholders. Carnival Chief Executive Micky Arison addressed the meeting, saying his company had the best interests of P&O Princess at heart. "We are brand builders, not brand destroyers," he said. His chief operating officer Howard Frank added: "By adjourning the meeting, you keep both proposals on the table. That way there's no need for you to second guess the regulators." Frank rejected earlier claims by P&O Princess Chief Executive Peter Ratcliffe that Carnival was looking to safeguard its status as the world's largest cruise operator. Ratcliffe said the Royal Caribbean merger would increase P&O Princess's presence in the U.S. market. "Together we can create the largest company in the world. We will have the brands, size and global reach to create a truly formidable competitor to Carnival," Ratcliffe said. What happens next may be up to Royal Caribbean, which could walk away from the deal. It has also planned a special meeting to review the planned merger with Princess. Royal Caribbean, also headquartered in Miami, is the world's No. 2 cruise operator with 23 ships and an estimated 22 percent market share. P&O Princess ranks third with a 13 percent share of the global market and 18 vessels. Early Friday, the Press Association news agency reported that individual shareholders it had spoken to at the meeting were against the Carnival bid as it would see the British company being taken over. Although Carnival has made shareholders a richer offer, analysts said it denies them any potential to profit from future growth in the business, analysts said. This is because many institutional shareholders in Britain are limited to only owning stock in British companies, so they would likely sell any carnival stock they received in exchange for their Princess shares. Carnival tabled its first conditional offer in December -- less than a month after P&O Princess and U.S.-based Royal Caribbean unveiled their planned alliance. If Princess were to merge with Royal Caribbean, it would own 50.7 percent of the new group, with the U.S. company taking 49.3 percent. Felicia Kantor, a leisure industry analyst at Lehman Bros. in New York, estimates the Royal Caribbean merger to be worth $3.7 billion for Princess shareholders. London-based P&O Princess, which has around 19,000 employees worldwide, operates under a number of brands, including P&O Cruises and Swan Hellenic in Britain.

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