Press Release: P&O Princess Cruises plc
February 11, 2002
MIAMI, FL -- On 7 February 2002, P&O Princess Cruises plc (NYSE: POC; ``P&O Princess'') received another
pre-conditional takeover proposal from Carnival Corporation (NYSE: CCL; ``Carnival''). The Board of P&O Princess
(the ``Board'') has now considered this proposal in detail.
The Board continues to recommend, after consultation with its advisers, that at the Extraordinary General Meeting
on 14 February (the ``EGM''), P&O Princess shareholders (the ``Shareholders'') vote against any proposal to
adjourn the meeting and in favour of the Combination with Royal Caribbean Cruises Ltd. (NYSE: RCL; ``Royal Caribbean'')
(together the ``Combination'').
Further details of the Board's considerations are set out below.
The New Carnival Proposal
The Board has consistently made it clear that it would judge any proposal from Carnival in terms of both value
and deliverability.
The Board believes that for the first time the price being offered by Carnival is at a realistic level for those
Shareholders who want to cash out of both the company and the industry. In contrast, the Combination with Royal
Caribbean offers significant potential for further value creation.
The Board notes, however, that Carnival has made no change to its proposal in terms of deliverability and this
remains a very significant concern to the Board.
The Board continues to believe that Carnival may be indifferent between breaking up the Combination and completing
a takeover of P&O Princess, given that both outcomes will result in Carnival preserving its position as the
world's largest cruise ship operator.
The Board notes that if the Combination is voted down at the EGM and Carnival's takeover proposal is not subsequently
commenced and completed, there would be minimal downside for Carnival. Carnival has little at risk in this transaction.
Shareholders have a great deal at risk -- most prominently the value creating Combination.
Unless and until it receives regulatory clearances, Carnival has no obligation to proceed. Its offer requires these
regulatory clearances to be ``on terms satisfactory to Carnival''. In practice this allows Carnival wide discretion
as to whether to proceed. The Board continues to believe that there is a material difference between the relevant
substantive facts of the two proposals from an anti-trust perspective. The Board considers, and has been advised
by its legal advisers and economists, that a transaction with Carnival is likely to create materially more significant
regulatory issues than the Combination. This is inevitable given Carnival's position as the largest cruise operator
in both the United States and Europe as compared with Royal Caribbean's number two position in the United States
and its relatively small European presence. In addition, there is no commitment on Carnival's part to meet any
conditions imposed, or resolve any issues raised, by the various regulators.
Adjournment of the EGM
As previously indicated, after consulting with its legal advisers and reviewing the background facts, P&O Princess
believes that the proposal and approval by its Shareholders of a resolution to adjourn the EGM should not give
Royal Caribbean the right to terminate the implementation agreement, although there is a risk that Royal Caribbean
could take a different view.
Notwithstanding this, given the background and current circumstances Royal Caribbean could reasonably be expected
to object to an adjournment of the EGM and, if it occurs, to explore all possible avenues for terminating the implementation
agreement with P&O Princess that provides for the Combination. As a practical matter, this could threaten the
ultimate success of the Combination.
Again, Carnival simply expects Shareholders to run all the risks of such an outcome.
The Combination with Royal Caribbean
The Board continues to believe that the Combination is a unique opportunity for the acceleration of value creation
for Shareholders.
The Combination will have the brands, the assets, the global reach and the cost cutting potential to create a truly
formidable competitor to Carnival.
Through the mechanism of the DLC and the consequent retention of the P&O Princess shares in the FTSE 100 index,
Shareholders will be able to retain their shares and benefit from both our efforts to increase EBITDA margins and
from the consequent re-rating of their shares. They will also be able to participate in the upside potential of
the industry.
The Board have a signed contract and an irrevocable commitment to vote in favour of the deal by the major shareholders
of Royal Caribbean. The Board therefore has a firm deal subject only to the achievement of regulatory clearance
in the United Kingdom and United States. The Board expects that P&O Princess will be able to receive those
clearances.
Recommendation
The Board has weighed the complex facts and issues involved in comparing the merits and risks of the Combination
with those of the Carnival takeover proposal. The Board believes that Carnival's takeover proposal does not constitute
a ``superior proposal''.
Based on its review the Board continues to recommend that, at the EGM on 14 February, the shareholders vote against
adjournment of the EGM and in favour of the Combination with Royal Caribbean.
Peter Ratcliffe, Chief Executive of P&O Princess, commented:
``Whilst Carnival, with its latest takeover proposal, has now put forward a realistic price the Board does not
believe that there is the commitment from Carnival to deliver it.
``Carnival has nothing at stake here and therefore has no downside. We, on the other hand, have a valuable transaction
that could be put at risk.
``With Royal Caribbean, our committed partner, we have the opportunity to create a formidable competitor to Carnival,
in a structure which allows our shareholders to retain their shares and therefore the benefits of the combination
and the growth in the industry.
``Accordingly, we continue to recommend that P&O Princess shareholders vote in favour of the Royal Caribbean
transaction and against any resolution to adjourn the EGM.''
Conference Call For Analysts
There was a conference call for analysts at 15.15 Friday (UK time)
Dial in replay numbers are as follows:
UK: + 44 (0) 208 797 2499 (Pin: 118440#)
US: + 1 877 289 8525 (Pin: 173007#)
There will be also be a webcast of the conference call on the P&O Princess web site -- www.poprincesscruises.com.
Schroder Salomon Smith Barney and Credit Suisse First Boston (Europe) Limited, which are regulated in the United
Kingdom by The Financial Services Authority, are acting for P&O Princess Cruises plc and no one else in connection
with the proposal from Carnival and will not be responsible to anyone other than P&O Princess Cruises plc for
providing the protections afforded to customers of Schroder Salomon Smith Barney and Credit Suisse First Boston
(Europe) Limited or for providing advice in relation to the approach.
The directors of P&O Princess accept responsibility for the information contained in this announcement. To
the best of the knowledge and belief of the directors of P&O Princess (who have taken all reasonable care to
ensure that such is the case), the information contained herein for which they accept responsibility is in accordance
with the facts and does not omit anything likely to affect the import of such information.
Salomon Brothers International Limited (trading as Schroder Salomon Smith Barney) is regulated in the United Kingdom
by the Financial Services Authority Limited. Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Schroders is a trademark of Schroders Holdings PLC and is used under licence.
Certain statements contained in this announcement are ``forward-looking statements'' that involve risks, uncertainties
and assumptions with respect to P&O Princess and Royal Caribbean and their respective subsidiaries and the
Combination, including certain statements concerning the transactions described herein, profit forecasts, working
capital, future results, strategies, plans and goals and other events which have not yet occurred. These statements
are intended to qualify for the safe harbours from liability provided by Section 27A of the US Securities Act of
1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended, which are part of the
US Private Securities Litigation Reform Act of 1995. You can find many (but not all) of these statements by looking
for words like ``will'', ``may'', ``believes'', ``expects'', ``anticipates'', ``plans'' and ``estimates'' and for
similar expressions. Because forward-looking statements involve risks and uncertainties, there are many factors
that could cause the transactions described herein not to occur and/or each of P&O Princess', Royal Caribbean's
and the Combination's actual results, performance or achievements to differ materially from those expressed or
implied in this announcement. These include, but are not limited to, regulatory and shareholder approvals, achievement
of planned synergies, economic and business conditions in general and, conditions in the cruise, travel and vacation
industries in particular, including changes in industry cruise ship capacity and competition from other cruise
ship operators and other vacation alternatives, safety and security concerns, incidents at sea, weather conditions,
the political climate, fluctuations in interest rates, fluctuations in the price of oil, changes in the tax and
regulatory regimes under which each company operates, capital expenditures, and factors impacting each of P&O
Princess', Royal Caribbean's and the Combination's international operations. In addition, the paragraph entitled
``Risk Factors'' in Section 5 of the EGM Circular and each of P&O Princess' and Royal Caribbean's Annual Report
on Form 20-F for the year ended 31 December 2000 filed with the US Securities and Exchange Commission contain important
cautionary statements and a discussion of many of the factors that could materially affect the accuracy of each
company's forward-looking statements and/or adversely affect their respective businesses, results of operations
and financial position, which statements and factors are incorporated herein by reference.
Subject to any continuing obligations under applicable law or any relevant listing rules, P&O Princess expressly
disclaims any intention or obligation to disseminate, after the date of this announcement, any updates or revisions
to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances
on which any such statements are based.
SOURCE: P&O Princess Cruises plc