P&O rejects raised Carnival bid

P&O: Wooed by both Royal Caribbean and Carnival

The world's second biggest cruise line company, P&O Princess, has rejected a raised takeover bid from industry leader Carnival.

P&O Princess said Carnival's latest takeover offer was still "not financially as favourable" as a proposed merger with its smaller rival Royal Caribbean.

The company added that Carnival's new bid did nothing to address the risk that US and European authorities may block a Carnival-P&O Princess merger on competition grounds.

"The revised proposal still falls short on value and adds nothing on deliverability," said P&O Princess chief executive Peter Ratcliffe.

Decision deadline

Last week, Carnival upped its original bid for P&O Princess by 12% to 500p a share, valuing the London-based company at around £3.5bn.

Carnival's bid depends on P&O Princess being able to extricate itself from its merger deal with Royal Caribbean without incurring financial penalties.

P&O Princess shareholders are due to vote on the proposed merger with Royal Caribbean on 14 February.

A rejection of the Royal Caribbean tie-up would put P&O Princess management under pressure to open merger discussions with Carnival.

Some P&O Princess shareholders are believed to favour talks with Carnival.

Shares in P&O Princess were marked 2.5p lower at 497.5p early on Monday.

Competition worries

P&O Princess has described Carnival's takeover attempt as a spoiling tactic designed to thwart its proposed tie-up with Royal Caribbean.

A P&O Princess-Royal Caribbean merger would create the world's largest cruise line company, knocking Carnival off the top spot.

P&O believes that a tie-up with Royal Caribbean is more likely to escape scrutiny by competition authorities in Europe, where the two companies' joint market share is below the 40% threshold set by the European Commission.

A Carnival takeover of P&O Princess, on the other hand, would exceed the 40% ceiling.

Miami-based Royal Caribbean on Monday also criticised Carnival's latest intervention.

"These distractions from the transaction threaten to prolong the business of concluding our deal, which would be damaging for both P&O Princess and Royal Caribbean," said Royal Caribbean chief executive Richard Fain.