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Carnival set to win battle for Princess
Put simply, Carnival's DLC (dual listed company) arrangement would see continuation of the existing primary listings of Carnival on the NYSE and P&O Princess on the London Stock Exchange and the existing index participation of Carnival in the S&P 500 and of P&O Princess in the FTSE 100, subject to the normal approvals. Many U.K. institutional investors have limits on the number of foreign shares they can hold and would have been forced to sell under an all-share proposal.
According to P&O Princess, the Carnival proposal provides for:
Depending on the extent to which the Partial Share Offer is accepted, between 21 per cent. and 26 per cent. of the economic and voting interest in the combined entity would be represented by the P&O Princess shares listed on the London Stock Exchange. Based on yesterday's closing price this would translate into an aggregate market capitalization of between UKP 2.6 billion and UKP 3.2 billion. <
If Carnival's DLC offer is accepted and approved by the Board and shareholders of P&O Princess, completion of Carnival's DLC proposal would be expected to occur during the first quarter of 2003.
Carnival's offer is subject to a number of pre-conditions which are within the control of P&O Princess and its shareholders. These are:
If these preconditions are not satisfied or waived by January 10, 2003 then the DLC offer would not be made and Carnival would be obliged to proceed with its Existing Share Exchange Offer.
In addition, Carnival will be permitted to withdraw its DLC offer prior to January 10, 2003 in certain limited circumstances, including if: (i) the Board announces that it is not going to recommend Carnival's DLC proposal; (ii) the Board recommends a competing offer; or (iii) a third party makes an offer subject to the Takeover Code, or otherwise legally binding, which Carnival reasonably determines is likely to be more attractive to P&O Princess shareholders than its DLC offer. In these circumstances, if it chooses to withdraw its DLC offer, Carnival would be obliged to proceed with its Existing Share Exchange Offer.
Assuming the pre-conditions are satisfied or waived and Carnival's DLC offer is made and accepted by P&O Princess, Carnival will not be obliged to, and will not, proceed with the Existing Share Exchange Offer. In particular, if P&O Princess' shareholders do not approve Carnival's DLC offer at the Extraordinary General Meeting held for that purpose, the Existing Share Exchange Offer would not be reinstated.
The P&O Princess board says it welcomes Carnival's DLC proposal because:
The Princess board says it believes that a DLC combination with Carnival would be an attractive opportunity for P&O Princess shareholders. The structure would allow all shareholders to retain their exposure to the cruise industry and its significant growth potential in North America, Europe and the rest of the world. Combining Carnival and P&O Princess would create the leading company in the industry, with a wide portfolio of complementary brands, including some of the best known and respected cruise brands in the world. Furthermore, the Board believes that significant synergies would be realised by the combination.
The Princess board notes that the Carnival DLC would be structured in broadly the same way as the proposed DLC combination with Royal Caribbean, although the U.K.-listed company would be smaller relative to the size of the U.S.-listed company. In addition, shareholders should note other differences between the two proposals, relating mainly to certain circumstances in which the DLC structure could be unwound without a majority vote of the shareholders of the UK.-listed company, as detailed in Carnival's announcement. However, the Board is satisfied that this could occur only in exceptional circumstances and further has been assured by Carnival that it is committed to maintaining the DLC structure.
The Princess board believes that a DLC combination with either Carnival or Royal Caribbean has the potential to accelerate the creation of value for shareholdersbut says it "has determined that a DLC combination with Carnival would be financially superior for P&O Princess' shareholders compared with the DLC combination with Royal Caribbean.
Since its previous announcement on October 4, 2002 P&O Princess has negotiated the detailed agreements that would implement Carnival's DLC proposal. The pre-conditions that Carnival has attached to its DLC proposal are within the control of P&O Princess and its shareholders. The other limited circumstances in which Carnival can elect not to proceed with its DLC proposal are situations that are likely to benefit P&O Princess shareholders. Based on the foregoing, the Board is satisfied that Carnival is committed to the DLC offer.
Accordingly, the Princess noard has withdrawn its recommendation of the Royal Caribbean proposal and has so advised Royal Caribbean.
Prior to the January 10, 2003 deadline, the board will review the Carnival DLC proposal and determine whether, in view of the circumstances at the time, P&O Princess should accept, and the Board should approve and recommend, Carnival's DLC offer.
P&O Princess today signed an agreement with Royal Caribbean, the main points of which are as follows: