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Battle on the high seas

Sprinkling the deal with poison pills, US cruise line company Royal Caribbean looked to have sewn up a merger with UK rival P&O Princess. P&O’s board seemed happy with this but its shareholders took a different view when Carnival showed up.

This January, Carnival and P&O Princess agreed to form a dual listed company in London and New York. This marks the end of an extraordinary takeover battle and is the undisputed cross-border M&A transaction of the year.

When Carnival chairman Micky Arison stood up to address a P&O Princess extraordinary general meeting early in 2002, he knew that his dreams of controlling the British cruise-liner company depended on it. The EGM had been called by P&O so that shareholders could approve a merger the board had agreed with Royal Caribbean, US company Carnival's closest competitor. It was Arison's aim to convince them not to do so.

Feelings were running high at the Grosvenor House Hotel in London. P&O shareholders, many of them long-time retail investors, were concerned about the future of the firm if it was taken over by a US rival. One asked whether a new owner of P&O would allow British troops to use its vessels in the event of another Falklands war, as Lord Sterling, P&O's chairman had.

Another shareholder, gesticulating towards the Carnival board members, sitting near the front of the conference room, asked: "Why don't they talk?" At this, Arison stepped onto the stage and approached the P&O directors.