Carnival ups Princess bid

January 17, 2002 Posted: 1745 GMT

NEW YORK (CNN/Money) -- Cruise operator Carnival Corp. on Thursday sweetened its hostile bid for P&O Princess by 12 percent to $5 billion.

Miami-based Carnival (CCL: down $0.16 to $25.90, Research, Estimates) revised its offer by 250 pence cash and 0.1380 Carnival shares for each Princess share.

The bid raises Carnival's offer to £5 a Princess share or £3.5 billion ($5 billion) from £4.5 a Princess share or £3 billion ($4.5 billion), a spokesman said.

News of the modified offer caused Princess shares to rise by nearly 3 percent Thursday in early afternoon trading, while Carnival shed nearly 2 percent. Royal Caribbean dropped nearly 4 percent.

Carnival, the world's largest cruise operator, is trying to break up a merger between Royal Caribbean and P&O Princess (POC: up $0.29 to $24.20, Research, Estimates) -- the second- and third-largest global players, worth around $7.4 billion. Carnival originally bid $4.5 billion in December for P&O Princess.

Carnival said its offer was contingent on P&O Princess ensuring that its joint venture with Royal Caribbean (RCL: down $0.48 to $16.27, Research, Estimates) can be terminated without cost or liability.

"We remain open to exploring with you the prospects of offering an alternative structure to your shareholders which retain all of the perceived benefits of the proposed DLC structure with Royal Caribbean," Carnival Chairman and CEO Micky Arison said in a letter to P&O board of directors.