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P&O Princess Turns Down Carnival Bid

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LONDON (AP) _ P&O Princess Cruises PLC balked Monday at a sweetened takeover bid by Carnival Corp., the world's biggest cruise ship operator, arguing the $5 billion offer was still too low and was likely to run aground on regulatory concerns.

Princess insisted it would stay on course with its own plan to merge with rival Royal Caribbean Cruises Ltd., the world's second-largest cruise company.

After Princess, headquartered in London, turned down its original bid, Miami-based Carnival followed up Thursday with a revised cash and shares offer worth 12 percent more. Carnival is eager to break up Princess' planned merger with Royal Caribbean, which would create a $6 billion business that would sink Carnival as market leader.

``We made it clear when Carnival made its initial proposal that our response was based on two simple criteria _ value for our shareholders and deliverability. The revised proposal still falls short on value and adds nothing on deliverability,'' Princess' chief executive Peter Ratcliffe said in a statement.

Princess said it has no intention of meeting with Carnival to discuss the company's latest offer. It would call a shareholders' meeting on Feb. 14 to consider the proposed merger with Royal Caribbean, despite Carnival's request that the meeting be canceled.

Princess, headquartered in London, ranks third in its share of the cruise market. A tie-up with Miami-based Royal Caribbean would form a fleet of 41 ships and 75,000 berths.

Princess would own 50.7 percent of the new group _ or $3 billion of its total equity value _ with Royal Caribbean taking the remaining 49.3 percent.

Their planned union triggered Carnival's initial bid, as all three companies struggle to cut costs in the wake of slowing business after the Sept. 11 terrorist attacks.

Princess said Carnival failed to specify any strategic logic for the buyout, and it complained that Carnival's offers were laden with ``particularly troubling'' regulatory and financial preconditions.

Princess also challenged Carnival's claim that a planned acquisition would be no more likely to encounter opposition from anti-competition watchdogs than would a merger of Princess and Royal Caribbean. A deal with Carnival, it insisted, ``is likely to give rise to more significant regulatory issues and risks than the combination with Royal Caribbean.''

Princess has already won regulatory approval from Germany's Federal Cartel Office for its proposed merger. Britain's Office of Fair Trading is to announce a decision on the deal by Jan. 29, and the U.S. Federal Trade Commission also is reviewing the proposal.

Princess' board of directors said Carnival appeared to be ``indifferent'' about whether it succeeded in acquiring Princess or simply breaking up the planned merger, ``given that both outcomes would result in Carnival preserving its position as the world's largest cruise ship operator and the leader in both the United States and Europe.''
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