Filing under Rule 425 under
the Securities Act of 1933
and deemed filed under Rule 14d-2
of the Securities Exchange Act of 1934
Filing by: Carnival Corporation
Subject Company: P&O Princess Cruises plc.
SEC File No. of Princess: 001-15136
[Logo]
CARNIVAL
CORPORATION
Investor Presentation
January 2002
FORWARD LOOKING STATEMENTS AND RESPONSIBILITY
- --------------------------------------------------------------------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this presentation constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Carnival Corporation ("CCL") has tried, wherever possible, to identify such
statements by using words such as "anticipate," "assume," "believe," "expect,"
"intend," "plan" and words and terms of similar substance in connection with any
discussion of future operating or financial performance. These forward-looking
statements, including those which may impact the forecasting of CCL's net
revenue yields, booking levels, price, occupancy or business prospects, involve
known and unknown risks, uncertainties and other factors, which may cause CCL's
actual results, performances or achievements to be materially different from any
future results, performances or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions which may impact levels of disposable
income of consumers and the net revenue yields for CCL's cruise products;
consumer demand for cruises and other vacation options; other vacation industry
competition; effects on consumer demand of armed conflicts, political
instability, terrorism, the availability of air service and adverse media
publicity; increases in cruise industry and vacation industry capacity;
continued availability of attractive port destinations; changes in tax laws and
regulations; CCL's ability to implement its shipbuilding program and to continue
to expand its business outside the North American market; CCL's ability to
attract and retain shipboard crew; changes in foreign currency rates, security
expenses, food, fuel, insurance and commodity prices and interest rates;
delivery of new ships on schedule and at the contracted prices; weather
patterns; unscheduled ship repairs and dry-docking; incidents involving cruise
ships; impact of pending or threatened litigation; and changes in laws and
regulations applicable to CCL.
CCL cautions the reader that these risks may not be exhaustive. CCL operates in
a continually changing business environment, and new risks emerge from time to
time. CCL cannot predict such risks nor can it assess the impact, if any, of
such risks on its business or the extent to which any risk, or combination of
risks may cause actual results to differ from those projected in any
forward-looking statements. Accordingly, forward-looking statements should not
be relied upon as a prediction of actual results. CCL undertakes no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.
CCL PLANS TO FILE A REGISTRATION STATEMENT ON FORM S-4 AND A
STATEMENT ON SCHEDULE TO WITH THE US SECURITIES AND EXCHANGE
COMMISSION IN CONNECTION WITH THE OFFER. THE FORM S-4 WILL CONTAIN A
PROSPECTUS AND OTHER DOCUMENTS RELATING TO THE OFFER. CCL PLANS TO
MAIL THE PROSPECTUS CONTAINED IN THE FORM S-4 TO SHAREHOLDERS OF
P&O PRINCESS CRUISES PLC ("POC") WHEN THE FORM S-4 IS FILED WITH THE SEC.
THE FORM S-4, THE PROSPECTUS AND THE SCHEDULE TO WILL CONTAIN
IMPORTANT INFORMATION ABOUT CCL, POC, THE OFFER AND RELATED
MATTERS. INVESTORS AND STOCKHOLDERS SHOULD READ THE FORM S-4, THE
PROSPECTUS, THE SCHEDULE TO AND THE OTHER DOCUMENTS FILED WITH THE
2
SEC IN CONNECTION WITH THE OFFER CAREFULLY BEFORE THEY MAKE ANY
DECISION WITH RESPECT TO THE OFFER. THE FORM S-4, THE PROSPECTUS, THE
SCHEDULE TO AND ALL OTHER DOCUMENTS FILED WITH THE SEC IN
CONNECTION WITH THE OFFER WILL BE AVAILABLE WHEN FILED FREE OF
CHARGE AT THE SEC'S WEB SITE, AT WWW.SEC.GOV. IN ADDITION, THE
PROSPECTUS AND ALL OTHER DOCUMENTS FILED WITH THE SEC IN
CONNECTION WITH THE OFFER WILL BE MADE AVAILABLE TO INVESTORS FREE
OF CHARGE BY WRITING TO TIM GALLAGHER AT CARNIVAL CORPORATION,
CARNIVAL PLACE, 3655 N.W. 87 AVENUE, MIAMI, FLORIDA, 33178-2428, US.
IN ADDITION TO THE FORM S-4, PROSPECTUS, THE SCHEDULE TO AND THE OTHER DOCUMENTS
FILED WITH THE SEC IN CONNECTION WITH THE OFFER, CCL IS OBLIGATED TO FILE
ANNUAL, QUARTERLY AND SPECIAL REPORTS, PROXY STATEMENTS AND OTHER INFORMATION
WITH THE SEC. PERSONS MAY READ AND COPY ANY REPORTS, STATEMENTS AND OTHER
INFORMATION FILED WITH THE SEC AT THE SEC'S PUBLIC REFERENCE ROOM AT 450 FIFTH
STREET, N.W., WASHINGTON, D.C. 20549. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR
FURTHER INFORMATION ON THE PUBLIC REFERENCE ROOM. FILINGS WITH THE SEC ALSO ARE
AVAILABLE TO THE PUBLIC FROM COMMERCIAL DOCUMENT-RETRIEVAL SERVICES AND AT THE
WEB SITE MAINTAINED BY THE SEC AT WWW.SEC.GOV.
Terms used in this presentation have the same meaning as in the Announcement
dated 16 December 2001.
The Directors of CCL ("Directors") accept responsibility for the information in
this presentation and to the best of their knowledge and belief (having taken
all reasonable care to ensure that such is the case) the information contained
in this presentation is in accordance with the facts and does not omit anything
likely to affect the import of such information. The only responsibility
accepted by the Directors for the information in this presentation concerning
POC and RCL, which has been compiled from published sources, is that it has been
correctly and fairly reproduced and presented.
Merrill Lynch International and UBS Warburg, a business group of UBS AG, are
acting as joint financial advisers and joint brokers exclusively to CCL and no
one else in connection with the Offer and will not be responsible to anyone
other than CCL for providing the protection afforded to clients respectively of
Merrill Lynch International and UBS Warburg as the case may be or for providing
advice in relation to the Offer.
3
CCL'S CORE MANAGEMENT TEAM
- --------------------------------------------------------------------------------
o Micky Arison Chairman and Chief Executive Officer
o Howard Frank Vice Chairman and Chief Operating Officer
o Gerry Cahill Senior Vice President and Chief Financial Officer
4
CCL's OFFER
- --------------------------------------------------------------------------------
o 200p in cash and 0.1361 CCL shares for each POC share
o Value of offer - 468p (1)
o 48% premium to price prior to RCL proposal (2)
o 30% premium to close on last business day before CCL's offer(2)
o Sharing savings if POC reduces cost of poison pills
Notes:
(1) CCL's closing price as at 4 January 2002--US$28.44
(2) POC pre-announcement price--317p. POC's closing price as at 14 December
2001-- 360p
5
CCL: A SUPERIOR DEAL FOR POC SHAREHOLDERS
- --------------------------------------------------------------------------------
CCL / POC RCL / POC
--------- ---------
o 48% premium to pre-RCL proposal o No premium
o 200p cash o No cash
o Fully values POC o Undervalues POC
o Simple transaction o Complex structure
o Strong partner o Weak partner
o Strong balance sheet o Highly geared,
constrained balance sheet
Both transactions face similar regulatory issues
6
CCL: A SUPERIOR OFFER
- --------------------------------------------------------------------------------
[graph for information below]
Current value of CCL offer (2) 468p
Current see-through price of RCL proposal (1) 362p
Change from current value of CCL offer
to current see-through price of RCL proposal 29%
Source: Datastream
Notes:
(1) RCL see-through price based on RCL current market cap of US$3.5bn and
POC's share of the proposed combined entity
(2) CCL's closing price as at 4 January 2002-US$28.44
7
POC SHAREHOLDERS MUST ACT URGENTLY
- --------------------------------------------------------------------------------
If POC shareholders approve RCL's proposal
CCL's superior offer CANNOT proceed
-----------------
Shareholders should instruct the board of POC to:
o CHANGE ITS RECOMMENDATION TO CCL
o DEFER OR ADJOURN EGM
8
CCL -- PROFILE
- --------------------------------------------------------------------------------
o Incorporated in 1974
o Floated on NYSE in July 1987
o Current market capitalisation US$16.7 billion (1)
o Arison family controls 47%
o Revenues US$4.5 billion (2)
o EBITDA US$1.3 billion (2)
o CCL already operates in the UK vacation market through its UK-flagged
luxury brand Cunard -- owner of the QE2
Notes:
(1) As at close 4 January 2002
(2) To year ended 30 November, EBITDA excludes impairment charge of US$140m
9
CCL BRANDS
- --------------------------------------------------------------------------------
Segment Principal markets Ships
---------- --------------------- ------
Carnival Cruse Lines Contemporary North America 16
Costa Contemporary S. Europe/S. America 7
Holland America Premium North America 10
Cunard Premium/Luxury UK/North America 2
Windstar Cruises Luxury North America 4
Logo Seabourn Luxury North America 4
---
43
---
10
CCL FINANCIAL PERFORMANCE
- --------------------------------------------------------------------------------
Compound annual growth 1990-2000
- ---------------------- ---------
Earnings 15.2%
Net capacity (1) 11.8%
[graph for information below]
Net Income
----------
(US$m)
1990 (2) 234
2000 965
Source: Company accounts and filings
Note:
(1) Available berth days
(2) 1990 figure is income from continuing operations
11
- --------------------------------------------------------------------------------
STRATEGIC RATIONALE
- --------------------------------------------------------------------------------
12
CCL-POC -- THE BEST COMBINATION
- --------------------------------------------------------------------------------
o Broad, complementary offering of well-established brands with expanded
geographic reach
o Carnival and Princess - highest unaided brand awareness in North
America
o Significant synergies
o Sharing best practices
13
PRO-FORMA CCL-POC FACT SHEET
- --------------------------------------------------------------------------------
LTM (1) CCL POC CCL/POC
- ------ ------ ------ ----------
Fleet size (ships) 43 18 61
Passengers carried (000s)(2) 2,669 919 3,588
Revenue (US$m) 4,427 2,451 6,877
EBITDA (US$m) 1,440 495 1,935
Market cap (3)(US$m) 16,671 3,994 19,351(4)
Net debt (US$m) 1,505 1,380 4,895(4)
Net debt / market cap 9.0% 34.6% 25.3%
Source: Company accounts and filings
Notes:
(1) CCL LTM to 31 August 2001 (as per US GAAP), POC LTM to 30 September
2001 (as per UK GAAP)
(2) Passengers carried for fiscal year 2000
(3) As at close 4 January 2002
(4) Pro-forma for equity and cash consideration in transaction
14
CORE BRANDS BY SEGMENT
- --------------------------------------------------------------------------------
North America UK/Europe
------------------ --------------
CCL POC CCL POC
---- ---- ---- ----
Luxury Seabourn
Windstar Cruises
- --------------------------------------------------------------------------------
Cunard Cunard
- --------------------------------------------------------------------------------
Premium Holland America P&O Cruises
Arosa
- --------------------------------------------------------------------------------
Princess
- --------------------------------------------------------------------------------
Contemporary Carnival Cruise Lines Costa Aida
(S Europe) Das Clubschiff
(Germany)
Note:
(1) Costa and AIDA are primarily Southern European and German brands
respectively
15
CCL -- THE BETTER PARTNER FOR POC
- --------------------------------------------------------------------------------
16
CCL IS THE MOST PROFITABLE OPERATOR
- --------------------------------------------------------------------------------
[graphs for information below]
EBIT margin (LTM)(1) Net income margin (LTM)
-------------------- -----------------------
CCL 24.4% 22.7%
POC 14.1% 10.9%
RCL 15.9% 10.3%
Source: Company accounts and filings
Notes:
(1) CCL operating income net of impairment loss
(2) CCL and RCL as per US GAAP, POC as per UK GAAP
17
CCL IS THE MOST EFFICIENT OPERATOR
- --------------------------------------------------------------------------------
[graphs for information below]
Average cost per berth EBIT / Available berth days ROIC(2)
---------------------- --------------------------- -------
(US$ 000)(1) (US$)
CCL 136 62 12.9%
POC 158 42 9.9%
RCL 167 46 9.0%
Source: Company accounts and filings
Notes:
(1) Gross ship PP&E net of construction in progress as at year end 2000
(2) ROIC is after-tax EBIT divided by average invested capital. POC
intercompany creditor in 1999 accounts treated as debt
(3) CCL and RCL as per US GAAP, POC as per UK GAAP
18
HISTORIC RETURNS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
CCL and RCL total shareholder returns at announcement
[graphs for information below]
Last 5 years Last 12 months
-------------- -------------------
CCL 93% 7%
RCL 41% (27)%
S&P 500 Composite 67% (13)%
Source: Datastream
19
- --------------------------------------------------------------------------------
THE RCL PROPOSAL
- --------------------------------------------------------------------------------
20
WHY POC SHOULD NOT ACCEPT RCL'S PROPOSAL
- --------------------------------------------------------------------------------
o No premium and no cash
o Inequitable share of economics
POC shareholders will own 50.7% of the combined entity but contribute
significantly more than this to the combined projected net earnings
Broker Date 2002 2003
- --------- ------ ------ ------
SSSB 29 Nov 01 64.4% 57.7%
Bear Stearns 9 Nov 01, 21 Nov 01 53.0% 57.7%
MS 21 Nov 01 59.5% 45.7%
UBSW 5 Dec 01 65.5% 59.6%
Disproportionate share of earnings and synergies accrue to RCL
21
WHY POC SHOULD NOT ACCEPT RCL'S PROPOSAL
- --------------------------------------------------------------------------------
o Is the best management in place?
The most senior management positions in the combined group
have been awarded to the RCL Chairman and CEO
o CCL and RCL total shareholder returns at announcement
[graphs for information below]
Last 5 years Last 12 months
--------------- -------------------
CCL 93% 7%
RCL 41% (27)%
S&P 500 Composite 67% (13)%
Source: Datastream
22
WHY POC SHOULD NOT ACCEPT RCL'S PROPOSAL
- --------------------------------------------------------------------------------
o No compensation for extra financial risk
[graph for information below]
A2 CCL today
A3
Baa1 POC pre-20 Nov
Baa2 \|/
Baa3 POC today
Ba1
Ba2 RCL pre-20 Nov
CCL POC RCL
------ ------- -------
Net debt / EBITDA (LTM) 1.0x 2.8x 5.6x
Net debt / total book cap 18.7% 34.4% 53.3%
Note:
(1) Credit ratings as per Moody's Investors Service
23
POISON PILLS
- --------------------------------------------------------------------------------
o The poison pills destroy value for POC shareholders
o Break Fee
US$62.5 million break fee exceeds UK market norm Takeover Code
maximum S$31 million (1% of market cap)
o Joint Venture
Cost of exiting JV estimated to be US$400m(1) via put
Possibility of having to support JV through financial
guarantees or subordinated debt on an ongoing basis
o Every US$100m poison pill cost equates to 10p per POC share
Note:
(1) US$200m enterprise value reduction and US$81-112m present value of
notes of US$300m face value (using 15-20% discount rate)
24
- --------------------------------------------------------------------------------
THE CARNIVAL OFFER
- --------------------------------------------------------------------------------
25
CCL -- PREVIOUS EXPRESSIONS OF INTEREST IN POC
- --------------------------------------------------------------------------------
o CCL has proposed to merge with POC both before and after spin off from
P&O
o Most recently, Howard Frank called Peter Ratcliffe on 24 September 2001
to reiterate interest in pursuing a combination -- no response received
o Offer communicated by letter on 13 December 2001
o POC rejected meeting, rejected Offer
26
TRANSACTION HIGHLIGHTS
- --------------------------------------------------------------------------------
o 200p in cash and 0.1361 CCL shares per POC share
o Current value of offer 468p(1) (US$27.01 per ADR)
o Offer to be increased by share of reduced cost of poison
o Mix and match election
o CCL willing to seek a listing for its shares on the LSE
o CCL willing to consider alternative structures, including DLC
Note:
(1) CCL's closing share price as at 4 January 2002--US$28.44
27
CCL'S PRE-CONDITIONS
- --------------------------------------------------------------------------------
Pre-conditions Comment
------------------ ------------
o Regulatory clearances o Similar position to RCL/POC combination
o POC's EGM - deferred or not o CCL cannot proceed with the Offer
convened, or resolutions voted down if RCL's proposal is approved
28
CCL'S PRE-CONDITIONS
- --------------------------------------------------------------------------------
Pre-conditions Comment
------------------ ------------
o Access to information given to RCL o Would be available if Code transaction
o Cost to POC of terminating JV not o Insufficient information available to
exceeding US$200 million date
o Committed funding being arranged o Unnecessary cost given regulatory timetable - CCL has liquidity of
approximately US$2.4 billion(1)
RCL's proposal has 15 conditions
Note:
(1) Based on Q3 results
29
SIMILAR ANTITRUST APPROVAL ISSUES
- --------------------------------------------------------------------------------
o Both the CCL and RCL proposals are subject to clearance from relevant
antitrust authorities
o Advice is that the regulatory risk for CCL is no greater than for RCL
o Simultaneous review of both RCL and CCL proposals does not reduce
likelihood of clearance for either proposal
o CCL filing already submitted in US, process has also commenced in
Europe this week
30
CCL-RCL - US ANTITRUST COMPARED
- --------------------------------------------------------------------------------
CCL RCL Differential
----- ----- ------------
North American Berths 33,252 33,046 <1%
CCL vs. RCI 13,348 14,332 (7%)
HAL vs. Celebrity 46,600 47,378 (1.7%)
Luxury 4,596 0
Net income(1)(US$m) 1,004 324 210%
ROIC(2) 12.9% 9.0% 43%
Market capitalisation(3)(US$m) 16,196 3,513 4.7x
Perception of CCL's greater size related more to profitability,
not relevant to antitrust analysis, than berths
Notes:
(1) LTM
(2) For year end 2000
(3) As at 4 January 2002
(4) CCL and RCL as per US GAAP
31
US ANTITRUST POSITION
- --------------------------------------------------------------------------------
POC/RCL have said they compete in a broad leisure travel market; CCL agrees
Cruises make up a very small proportion of the wider vacation market in US
US leisure travel totalled > 260 million(1) people in 2000
Total number of US cruise passengers was 7 million(2) in 2000
In that market, there are no significant US antitrust issues
In a narrow cruise market, CCL and RCL are similarly postured for antitrust
purposes
Both deals are subject to US antitrust review involving virtually identical
antitrust issues under the same substantive legal standards and on essentially
the same timetable
Notes:
(1) Source: Travel Industry Association
(2) Source: CLIA
32
EU ANTITRUST POSITION
- --------------------------------------------------------------------------------
Cruises make up a very small proportion of the wider vacation market in Europe
European outbound holiday volume totalled 373.5 million passengers in 2000(1)
Total number of European cruise holidays was 2.1 million in 2000(1)
Cruise in Europe is in its infancy amounting to 0.6% of the wider, outbound
vacation market and as such CCL believes that antitrust issues should not be a
hurdle
Notes:
(1) Source: G.P Wild (International) Limited
33
EUROPEAN CRUISE VACATIONS
- --------------------------------------------------------------------------------
[graphs for information below]
European Cruise Capacity (berths)
---------------------------------
POC (3)/Costa 28.9%
Others 71.1%
Source: Cruise Industry News
W. European Passenger Mix
-------------------------
France 13%
Germany 19%
Italy 13%
UK 38%
Benelux 4%
Scandinavia 2%
Iberia 4%
Other 5%
PAX: c.2M
Source: G.P. Wild
Notes:
(1) Based on number of passengers and berths
(2) Costa Germany includes Netherlands and Austria
(3) Includes P&O Cruises, AIDA, and Swan Hellenic
34
EUROPEAN CRUISE VACATIONS
- --------------------------------------------------------------------------------
[graphs for information below]
UK
--
CCL 8%
POC 23%
Airtours 16%
Thomson 10%
RCI 7%
Others 36%
PAX: c.750,000
Germany
-------
CCL 12%
POC 18%
Hapag Lloyd 9%
Air Maritime 8%
Phoenix 7%
Deilmann 6%
RCI 6%
Others 34%
PAX: c.380,000
Source: G.P. Wild, Deutsche Bank Equity Research (11 December 2001), CCL
Notes:
(1) Based on number of passengers and berths
(2) Costa Germany includes sales agents in the Netherlands and Austria
(3) Figures for Germany include market share of all CCL brands
35
CCL: A SUPERIOR DEAL FOR POC SHAREHOLDERS
- --------------------------------------------------------------------------------
CCL / POC RCL / POC
--------- ---------
o 48% premium to pre-RCL proposal o No premium
o 200p cash o No cash
o Fully values POC o Undervalues POC
o Simple transaction o Complex structure
o Strong partner o Weak partner
o Strong balance sheet o Highly geared, constrained
balance sheet
Both transactions face similar regulatory issues
36
POC SHAREHOLDERS MUST ACT URGENTLY
- --------------------------------------------------------------------------------
If POC shareholders approve RCL's proposal
CCL's superior offer CANNOT proceed
----------------
Shareholders should instruct the board of POC to:
o CHANGE ITS RECOMMENDATION TO CCL
o DEFER OR ADJOURN EGM
37
[Logo]
CARNIVAL
CORPORATION
Investor Presentation
January 2002
38