Carnival bid for P&O still on track

London, January 23: | Updated: Jan 24 2002, 05:30am hrs
US cruise operator Carnival Corp. said on Wednesday, a request by US regulators for more information on its bid for P&O Princess Cruises Plc was standard procedure and did not signify regulatory problems.

Carnival, fighting to retain its lead in global cruising, said it had expected the request and it still believed there was no material difference in the regulatory conditions attached to its offer for P&O Princess and the British firm’s planned merger with Royal Caribbean Cruises Ltd.

The world’s three largest cruise lines are locked in a bid-battle, as they seek cost-cutting alliances to counter a drop in ticket prices after the September 11 attacks on the United States dealt a blow to leisure businesses worldwide.

Analysts agreed the request for additional information by the US Federal Trade Commission was standard procedure.

"Under Hart-Scott-Rodino, this is totally normal," said one, speaking on condition of anonymity. Hart-Scott-Rodino is the name given to the US anti-trust process applied to takeover deals where assets change hands.

"The only reason P&O Princess and Royal Caribbean haven’t had to do the same is that they’re not going through Hart-Scott-Rodino," the analyst added.

No assets would change hands under the planned merger between P&O Princess and Royal Caribbean. In a statement, Carnival said the request for extra information would not shift its bid for P&O Princess onto a different regulatory timetable from the proposed merger.

On Monday, P&O Princess rejected an improved cash and shares bid of around 3.5 billion pounds or 500 pence per share from Carnival, in favour of its agreed merger with Royal Caribbean.

Carnival responded by saying it would lobby P&O Princess shareholders to delay a vote on the merger at an extra-ordinary general meeting (EGM) for February 14. This would give regulators time to examine both proposals, Carnival said.

P&O Princess believes any delay to the EGM would jeopardise its deal with Royal Caribbean.

The deal with Royal Caribbean valued P&O Princess around 319 pence per share when it was announced on November 19. While well below Carnival’s offer, P&O Princess is sceptical whether a deal with Carnival would win regulatory approval, or even whether the US firm would fulfil its pre-conditional offer.

In an unusually structured deal, no cash or shares would change hands under the planned merger, and the two firms would keep separate listings.

The proposal includes a $62.5 million break-up fee if it does not go ahead.— Reuters