P&O fights to fend off Carnival

P&O tie up with Caribbean scuppered?

Cruise ship operator P&O Princess has said a takeover bid from US rival Carnival may be a tactical move designed to thwart P&O's own plans for a merger with Royal Caribbean.

P&O Princess claimed on Wednesday that Carnival's proposed takeover runs the risk of being held up by competition authorities for so long that its own plans for a tie-up with Royal Caribbean may have to be shelved indefinitely.

"It may be that Carnival do not really mind whether the two transactions either both pass or both fail, but we do," said P&O chief executive Peter Radcliffe.

Carnival's takeover bid may be no more than "a spoiling tactic designed to disrupt the creation of significant value for P&O Princess' shareholders," he added.

Upping the ante

However, P&O Princess has given its shareholders until 14 February - six weeks longer than originally planned - to weigh up Carnival's £3.2bn ($4.48bn) cash and shares offer.

The company said the delay gives Carnival time to come forward with a "credible, deliverable, and more valuable transaction."

But P&O stressed that a "merger of equals" with Royal Caribbean remains its preferred option.

A tie-up between P&O Princess and Royal Caribbean would create the world's biggest cruise ship company, knocking Carnival off the top spot.

European competition scrutiny

The proposed P&O Princess/Royal Caribbean tie-up would escape scrutiny by competition authorities in Europe, where the companies' joint market share is below the 40% threshold set by the European Commission.

But a Carnival takeover of Princess would exceed the 40% ceiling, triggering a full investigation by the EC.

P&O Princess has argued that this makes its proposed takeover by Carnival less likely to gain worldwide regulatory approval.

But Carnival claims that European regulators would clear its takeover of P&O provided they considered its impact on the wider holiday market, rather than just on the market for holiday cruises.

Both proposed mergers would also have to be given the green light by anti-trust watchdogs in the US.

P&O Princess shares, which were last week promoted to FTSE 100 index of leading company stock, were trading 4% higher at 379.25p on Wednesday afternoon.