Cruise firm prepares for talks on rival merger bids

Cruise giant Carnival was today preparing to meet P&O Princess executives after rival bids for the UK group both received regulatory backing.

P&O Princess will now weigh up the merits of Carnival’s offer against the merger deal it previously recommended with Royal Caribbean following the Federal Trade Commission’s support of both proposals on Friday.

The UK operator had previously rejected Cunard owner Carnival’s requests for talks while the regulatory position on the bids remained unclear.

It has now told Miami-based Carnival that it is willing to meet and said it believed its offer was both “feasible and financially more attractive” than the deal already agreed with Royal Caribbean.

Carnival stepped into the fray earlier this year with a last minute take-over offer to rival Royal Caribbean’s merger of equals.

The interest resulted in the postponement of a shareholder meeting to back the creation of an enlarged company to match the world’s largest firm Carnival.

That meeting is now likely to be reconvened before November 16 – the termination date of the agreement with Royal Caribbean.

P&O Princess chief executive Peter Ratcliffe said the Royal Caribbean proposal remained its recommended offer but that under the terms of the deal it could meet with Carnival.

The interest from P&O has been further stirred by Carnival’s decision to match Royal Caribbean’s dual listing structure involving shares of the enlarged company being listed in London and New York.

Mr Ratcliffe added: “We are pleased that the regulatory position is now clear. One of our principal concerns about the Carnival proposal – namely deliverability on the regulatory front – has been removed.

“We have decided that we can and should begin talking to them about their proposal.”

However, one stumbling block could still prove to be the existence of break fees payable if either party walks away from the Royal Caribbean deal.

Royal Caribbean has lobbied regulators strongly against the Carnival deal and said it noted with regret the decision by the Federal Trade Commission.

Chief executive Richard Fain added he still believed his proposals represented the best deal for both sets of shareholders.

He said: “We have no doubt that our agreed merger represents a compelling opportunity to create significant value for both P&O Princess and Royal Caribbean shareholders.”