NCL Turns Down Carnival's $1.7B Takeover Bid

Monday, December 06, 1999
NCL Holding ASA flatly rejected a 30 crown ($3.72) per share takeover offer from Carnival Corp, saying it undervalued the group's potential. NCL Chairman Kristian Siem, who controls 14.9 percent of the Miami-based cruise company, said it would be a "waste of time" to even meet Carnival given the offered price. "To meet based on a price level of 30 crowns is a waste of time," Siem said. "It's very pleasant that Carnival values NCL, and this confirms that the company is fully able to survive on its own," he said. The group's board advised shareholders to reject the bid, which was "all too low in relation to the company's value and potential." "The offer also represents a significant discount in relation to the pricing of other companies in the cruise industry," the board said. Carnival, the world's largest cruise operator, whose lines include Cunard and Holland America, launched the surprise bid for NCL, the fourth largest operator, on Dec. 1. The bid values NCL at $884 million. Carnival would also assume NCL debts, raising the value of the transaction to $1.7 billion. NCL's share price jumped 35 percent when trading opened on the Oslo bourse on Dec. 2. Analysts said they saw little chance of wooing NCL with anything below 40 crowns per share. "You won't get Siem to go along with (Carnival's) bid. At 40 or 45 crowns he might consider it," said one analyst. Counterbids Ruled Out NCL shares later took a dip after the two other major cruise operators, P&O and Royal Caribbean Cruises, both said that they would not counter bid for NCL. NCL managing director Geir Aune, said he saw little chance of Carnival succeeding with its offer. "I would be very surprised if the company's shareholders chose to accept this offer," he said. Aune declined to say what he saw as a reasonable price for the company. He reiterated comments from Siem that there would not be any discussions with Carnival at the current price level. One analyst said he doubted there would be any higher offer from Carnival. "With NCL's revenues it might be difficult to defend a higher price," he said. NCL booked nine-month pre-tax profits before extraordinary items of $36.18 million, almost doubled from the $18.6 million booked in the same 1998 period. Other analysts have noted that NCL has an operating margin of about nine percent, while Carnival's is around 30 percent. - (Ole Petter Skonnord, Reuters)
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