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Monday, 27 May, 2002, 11:04 GMT 12:04 UK
Cruise giant baulks at Cunard sale
Artist's impression of the Queen Mary 2
The Queen Mary 2: Set to be the world's largest liner
Cruise giant Carnival has said it would not sacrifice its famous Cunard Line division to secure the takeover of P&O Princess Cruises.

While Carnival bosses have said they would go to extreme lengths to clinch a deal with P&0, they have baulked at the thought of selling a division which owns, in the QE2, the world's most famous cruise ship.

Recent reports have speculated that competition authorities would demand the sale of Cunard to offset the share of the global cruise market a merged Carnival/P&O Princess would have.

European Commission regulators last week invited Carnival's response to a list of preliminary objections to the tie-up.

UK sacrifice?

Carnival, based in the United States, said on Monday it would "not consider disposing of Cunard Line".

However, it said it would consider, after the merger, hoisting a "for sale" sign over P&O Princess's UK arm.

"Should it ultimately prove necessary, Carnival would, in certain circumstances, be prepared to consider disposing of P&O Cruises UK," the US firm said.

P&O Cruises UK, which carried 148,000 passengers last year on its four liners, claims to be Britain's most popular premium cruise operator.

Analysts believe European Commission fears over the takeover revolve largely around a lack of a serious rival in the UK and German markets, should Carnival and P&O Princess merge.

Two-edged sword

Analysts took Carnival's statement as a sign of its enthusiasm to seal the takeover, against the wishes of P&O directors, who would prefer a tie-up with cruise operator Royal Caribbean.

"The fact [Carnival] are saying they are prepared to look at selling P&O Cruises UK shows how committed they are," said Simon Champion, an analyst at Deutsche Bank.

But the statement is also likely to be used by P&O chiefs as a signal that a tie-up with Carnival could indeed become entangled in regulatory objections.

P&O chiefs have used regulatory concerns as a key plank in their drive to see-off Carnival's bid.

'Golden age'

The Cunard sale would deprive Carnival of the benefit of two liners currently under construction for the division, at a cost of $1.2bn.

"These two vessels... demonstrate Carnival's full commitment to growing this world recognised brand," Monday's statement said.

One of the vessels, the 150,000 ton Queen Mary 2, is set to be the world's largest passenger ship when it is launched in January 2004.

The second ship, an 85,000 ton vessel as yet unnamed, will be launched a year later.

The liners will create "a new golden age of ocean liner travel, for those who missed the first", Cunard publicity material said.

See also:

18 Feb 02 | Business
14 Feb 02 | Business
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