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
[GRAPHIC OMITTED]
[LOGO - CARNIVAL CORPORATION]
Carnival Corporation
Carnival Place
3655 N.W. 87 Avenue
Miami, Florida 33178-2428
United States
The Board of Directors
P&O Princess Cruises plc
11-12 Charles II Street
London SW1Y 4QU
United Kingdom
26 February 2002
For the attention of Lord Sterling of Plaistow
Dear Lord Sterling,
I am writing on behalf of the board of Carnival firstly to thank you for the
courtesy you showed the Carnival team at your EGM. Your polite and impartial
chairing of the meeting was much appreciated, as was your decision to let Howard
and me address your shareholders directly.
I am aware that since the EGM you have continued to express your concerns about
the deliverability of our Increased Offer. As all parties have acknowledged, the
regulatory review process will be lengthy and involved. However, as your
shareholders have now chosen to allow both proposals to be reviewed by the
relevant regulatory authorities before making their decision, we continue to
believe their interests will be best served by obtaining regulatory clearance
for both proposals. Indeed, as we have said since December, we believe that both
proposals are similarly situated for purposes of the regulatory reviews and face
the same issues based on the same basic facts.
I would like to take this opportunity to confirm that Carnival remains fully
committed to working constructively with the regulatory authorities in the US
and Europe and to pursuing those regulatory reviews to their ultimate
conclusion. In the interests of your shareholders, who have clearly expressed
their wish to have the opportunity to consider Carnival's Increased Offer after
regulatory clearance has been obtained, I hope that you and your team will now
work constructively to secure regulatory clearance for both proposals without
prejudice to either. We would like to propose that our advisors consult with
your advisors to coordinate our respective responses to the ongoing reviews.
As you are aware, our Increased Offer is conditional on P&O Princess terminating
the Joint Venture Agreement through the commercial benchmark mechanism. You
confirmed in your announcement of 4 February 2002 that your Board has been
advised that "it has no express or implied obligation under the Joint Venture
Agreement or otherwise to cause the benchmarks to be satisfied."
As we have said in our previous letters, we are prepared to discuss with you
ways in which we can together develop a DLC structure. Many of your shareholders
have indicated to us that they would find this type of structure attractive.
Under a DLC structure, we envisage that the economic interest of P&O Princess
would reflect the 550p per share valuation of P&O Princess under our Increased
Offer. This would be equivalent, based on the current market values of P&O
Princess and Royal Caribbean, to P&O Princess shareholders receiving 62 per
cent. of the equity in the proposed combination with Royal Caribbean.
I hope that we can together ensure that both proposals obtain regulatory
clearance and are capable of completion. We believe that this is in the best
interests of P&O Princess shareholders who can then make their choice based on
valuation and strategic criteria alone.
Yours sincerely,
/s/ Micky Arison
Micky Arison
Chairman and CEO
cc: Peter Ratcliffe, CEO, P&O Princess
ENQUIRIES:
CARNIVAL Telephone: +1 305 599 2600
Tim Gallagher
FINANCIAL DYNAMICS Telephone: +44 20 7831 3113
Nic Bennett
APCO EUROPE Telephone: +32 2 645 98 11
Tom Brookes
Merrill Lynch International and UBS Warburg Ltd., a subsidiary of UBS AG, are
acting as joint financial advisors and joint corporate brokers exclusively to
Carnival and no-one else in connection with the Increased Offer and will not be
responsible to anyone other than Carnival for providing the protections afforded
to clients respectively of Merrill Lynch International and UBS Warburg Ltd. as
the case may be or for providing advice in relation to the Increased Offer.
SHAREHOLDER DISCLOSURE OBLIGATIONS
Any person who, alone or acting together with any other person(s) pursuant to an
agreement or understanding (whether formal or informal) to acquire or control
securities of P&O Princess or Carnival, owns or controls, or become the owner or
controller, directly or indirectly of one per cent. or more of any class of
securities of P&O Princess or Carnival is generally required under the
provisions of Rule 8 of the City Code to notify the London Stock Exchange and
the Panel of every dealing in such securities during the period from 16 December
2001, the date of the announcement of the original Offer, until the first
closing date of the Increased Offer or, if later, the date on which the
Increased Offer becomes, or is declared, unconditional as to acceptances or
lapses. Dealings by Carnival or P&O Princess or by their respective "associates"
(within the definitions set out in the City Code) in any class of securities of
Carnival or P&O Princess must also be disclosed. Please consult your financial
advisor immediately if you believe this rule may be applicable to you.
Disclosure should be made on an appropriate form before 12 noon (London time) on
the business day following the date of the dealing transaction. These
disclosures should be sent to the Company Announcements Office of the London
Stock Exchange (fax number: +44 20 7588 6057) and to the Panel (fax number: +44
20 7256 9386).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this announcement constitute "forward-looking statements"
within the meaning of the US Private Securities Litigation Reform Act of 1995.
Carnival 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 Carnival's annual cost savings that
underlie estimates of synergies and one time costs to implement synergies, net
revenue yields, booking levels, price, occupancy or business prospects, involve
known and unknown risks, uncertainties and other factors, which may cause
Carnival'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 Carnival'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; Carnival's ability to implement its brand strategy, Carnival's
ability to implement its shipbuilding program and to continue to expand its
business outside the North American market; Carnival'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 Carnival.
Carnival cautions the reader that these risks may not be exhaustive. Carnival
operates in a continually changing business environment, and new risks emerge
from time to time. Carnival 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. Carnival undertakes
no obligation to update publicly or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
CARNIVAL 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
COMMENCEMENT OF THE INCREASED OFFER. THE FORM S-4 WILL CONTAIN A PROSPECTUS AND
OTHER DOCUMENTS RELATING TO THE INCREASED OFFER. CARNIVAL PLANS TO MAIL THE
PROSPECTUS CONTAINED IN THE FORM S-4 TO SHAREHOLDERS OF P&O PRINCESS 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 CARNIVAL, P&O PRINCESS, THE INCREASED
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 SEC IN
CONNECTION WITH THE INCREASED OFFER CAREFULLY BEFORE THEY MAKE ANY DECISION WITH
RESPECT TO THE INCREASED OFFER. THE FORM S-4, THE PROSPECTUS, THE SCHEDULE TO
AND ALL OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE INCREASED
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 INCREASED 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 INCREASED OFFER, CARNIVAL IS OBLIGATED
TO FILE ANNUAL, QUARTERLY AND CURRENT 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.