Carnival Says It Won't Hike Bid for NCL

NCL's chairman has refused to meet with Carnival executives because he believes the offer is too low and drastically undervalues his firm.
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Carnival

(CCL) - Get Report

said Friday it would not increase its $1.7 billion offer for

NCL Holding ASA

(NRW)

, despite NCL's refusal to accept the bid.

Also Friday, NCL's chairman, Kristian Siem, said that two other cruise line operators indicated their interest in purchasing the company, but that the company was not in negotiations. He gave no further details.

The two likeliest acquirers,

Royal Caribbean

(RCL) - Get Report

and the UK's

Peninsular & Oriental Steam Navigation

(PO:LSE), which owns

Princess Cruise Lines

, have both announced that they are not interested.

"It's hard to imagine there's any other credible buyer in the cruise industry," Micky Arison, Carnival's chairman and chief executive, said in a conference call with reporters. Arison and other Carnival executives are in Oslo attempting to negotiate a deal.

On Wednesday, Carnival, the world's biggest cruise line operator, made an unsolicited bid for the operator of

Norwegian Cruise Line

. The bid represents an all-cash tender offer of 30 Norwegian kroner per share. Carnival would assume NCL's debt as part of the deal.

Carnival shares were up 3%, or 1 5/8, to 49 5/8 in mid-afternoon trade, while NCL Holding was down 1%, or 0.40 Norwegian kroner, to 32.20 on the Oslo stock exchange late Friday. NCL shares have fallen back after optimism over the deal led to a surge of over 30% on Thursday. (Carnival closed up 1 3/4, or 4%, to 49 3/4 while NCL closed down 1%, or 0.40 Norwegian kroner, to 32.20.)

Siem has so far refused to meet with Carnival executives because he believes the offer is too low and drastically undervalues NCL. The executives are clearly frustrated because they feel that their bid is more than generous, at a multiple of 20.3 times fiscal 2000 earnings. "That's basically the same multiple as Royal Caribbean

20.5 times, even though clearly NCL should be a discount to Royal Caribbean," Arison said. "Why isn't he trying to negotiate with us? That tells me that he doesn't have a story which would affect our offer price."

Arison and Howard Frank, Carnival's vice chairman and chief operating officer, will spend the weekend "through Monday and perhaps even later" in Oslo, where NCL is based, according to Frank, continuing to meet with NCL's major institutional shareholders. The ones they have already met "all seemed very receptive and obviously very pleased, though they made no commitments to us," Frank said in the conference call.

One shareholder they won't meet though is Trygve Hegner, who owns 8% of the stock. "He did agree to meet with us but has rescinded that under pressure from the board," Arison said. "But he attended our press conference and watched our presentation" in Oslo Friday morning.

Carnival, based in Miami, needs to achieve more than 50% of NCL's shares in order to succeed. There is concern on Carnival's part that NCL's management might try to develop a "poison pill" defense to thwart a takeover, "though we have no indication that is the case and we hope they will not pursue that course of action," Frank said.

Carnival currently owns approximately 4.3 million shares, or a 1.8% stake, in NCL. That stake was bought over the course of the last four weeks.