Cruise battle heats up
February 14, 2002: 8:31 p.m. ET
The cruise ship industry's biggest takeover battle drags into wee hours.
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* Carnival ups revenue estimates - Feb. 12, 2002
LONDON (Reuters) - The cruise ship industry's biggest ever takeover battle hung in the balance early on Friday, during a marathon shareholder meeting to decide on the fate of Britain's P&O Princess.
P&O Princess shareholders gathered in London on Thursday to decide between a hostile £3.8 billion ($5.4 billion) bid by Carnival Corp., the world's biggest cruise operator, or an agreed merger with Royal Caribbean Cruises Ltd.
But one P&O Princess shareholder tried to stop a vote on the Royal Caribbean deal, proposing to adjourn the meeting to win more time to consider Carnival's higher bid. The tally of the vote on the motion to adjourn will not be known until early Friday.
The 11th-hour move left the world's three biggest cruise operators locked in their increasingly bitter bid battle as they seek cost-cutting alliances to counter a slump in tourism since Sept. 11.
"This is becoming a marathon," said P&O Princess Chairman Jeffrey Sterling.
A vote to adjourn would essentially be a boost to Carnival, but a blow to the Caribbean/Princess deal. Both Caribbean and Princess have said adjourning the meeting could jeopardize their merger.
A result on the adjournment motion was originally expected by early evening Thursday London time, but P&O Princess said the result would not be known before Friday. A company spokesperson said counting the votes had proved more complex than anticipated, due to a higher-than-expected turnout by institutional shareholders.
P&O Princess shares closed unchanged at 399 pence in London. However, Royal Caribbean's shares closed down 5.1 percent at $17.30 in New York. Analysts said this suggested shareholders would in fact vote to adjourn the meeting, thus jeopardizing Caribbean's deal with Princess.
"People who are trading Caribbean down feel the merger will be adjourned," said a U.S-based fund manager, declining to be identified.
Carnival (CCL: Research, Estimates) shares closed down 0.2 percent at $26.43 on Thursday.
Although Carnival's bid offers a higher premium than the Royal Caribbean merger, analysts say it carries tougher regulatory hurdles than the Caribbean deal, which promises millions of dollars in annual savings.
The Royal Caribbean deal values P&O Princess (POC: Research, Estimates) at 475-500p, including the value of estimated post-merger savings, analysts say. Carnival's bid valued P&O Princess at about 550 pence a share when first announced, but P&O Princess is trading at a discount to both bids, partly reflecting regulatory hurdles.
Carnival's current offer is 0.3004 of its own shares for each P&O Princess share. It also has a partial cash alternative of 250 pence per share.*
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Just read in Cruise News Daily that the meeting has indeed been adjourned without a vote on the proposed merger with RCI; 253,019,846 votes were cast in favor of adjournment while 151,781,075 were cast against it. RCI in Miami announced their meeting was then canceled since they had nothing on which to vote.