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Old October 14th, 2002, 04:25 PM
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Default More merger info

Nearly one year ago, Princess and Royal Caribbean agreed to merge, with Royal Caribbean's chairman
slated to run the combined entity. Carnival launched a hostile takeover bid for Princess soon after, which
analysts agreed was worth more to Princess shareholders than the original deal with Royal Caribbean.
Because the deals involved the 3 largest companies in the cruise industry, any merger was subject to review and approval by regulatory agencies in the US and in Europe, so the cruise
lines filed their proposals and waited.

This week, in a 3-2 vote, the FTC wrapped up its 10-month investigation with a decision that neither of the
unions would create an anticompetitive environment. The European Commission had already given its
approval. With regulatory hurdles now cleared, Princess shareholders are scheduled to vote next month on
whether to proceed with the Royal Caribbean merger. Most analysts expect the shareholders will vote against
that merger, which will clear the path for a vote on a Carnival buyout in December. There may be more twists
and turns in this road, but Carnival clearly has the inside track at this stage.



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Old October 15th, 2002, 06:24 PM
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Default Re: More merger info

Y2C,

I'm not so sure that Carnival Corporation (NYSE: CCL) does have the inside track.

>> 1. There are conditions in Carnival's "preconditional tender offer" that still have not been fulfilled, including termination of a joint venture between P&O Princess Cruises Plc (LSE: POC). and Royal Caribbean Cruises Ltd (NYSE: RCL).

>> 2. The terms of Carnival Corporation's "preconditional tender offer" were part cash and part stock. Carnival Corporation's stock has dropped in value since the announcement of the offer, whereas shares of P&O Princess Cruises Plc. are up significantly. As a result, the terms of Carnival's "preconditional tender offer" do not provide the premium that they would have provided at the time of the announcement of the offer.

>> 3. Press releases from P&O Princess Cruises Plc. indicate that several major institiutional shareholders cannot hold foreign (that is, non-British) stocks due to provisions of either British law or their institutional rules. Such holders either (1) cannot accept Carnival's offer or (2) would be forced into immediate sale of the shares received in the transaction, probably causing a collapse of Carnival's share price. If they can accept such an offer, it would be very risky to do so.

Since the shares of P&O Princess Cruises Plc. are up substantially more than those of Royal Caribbean Cruises Ltd., though, it does seem likely that there will be an adjustment of the ratio of equivalence between the two shares, such that P&O Princess Cruises Plc. shareholders will hold a larger percentage of the combined company. The fact that P&O Princess Cruises Plc. now is negotiating with Carnival Corporation also is a lever for negotiating more generous terms. There's little doubt that Royal Caribbean Cruises Ltd. will face a significant competitive disadvantage if P&O Princess Cruises Plc. goes to Carnival Corporation, and thus may not have much choice but to make whatever concessions it takes to gain approval of the original merger.

Norm.
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