Carnival Says It Held Talks With Princess Cruises’ Parent

U.S. cruise giant Carnival Corp., which last year took control of Cunard Line, said Monday that it has held talks with the parent of Los Angeles-based Princess Cruises, a smaller rival in the world’s consolidating leisure-cruising sector.

A Carnival spokesman gave no details of the talks, but London’s Mail on Sunday newspaper said Miami-based Carnival had offered $11 billion to buy London-based Peninsular & Oriental Steam Navigation.

A P&O; spokesman dismissed the report, saying the operator of Princess Cruises had received no offer.

“We have had discussions with P&O;, which is something we do from time to time with companies in the industry,” Carnival spokesman Tim Gallagher said. “I am not prepared to comment further on the nature of those talks.”

Gallagher also declined to say whether or not the talks were continuing between P&O; and Carnival, which, along with partners, paid $500 million for Britain’s touchstone Cunard Line and its Queen Elizabeth 2 liner in April 1998.

“From Carnival’s point of view, I’d be buying P&O;,” said U.S. cruise industry analyst Scott Barry of Raymond James & Associates. “There’s a segment Princess serves that fits right between Carnival and Holland America.”

Speculation of a combination comes as Princess embarks on a $3-billion shipbuilding program that will nearly double its size. The line has three ships on order and in June announced plans for four more. It currently operates nine ships.

Princess also said recently it would consolidate operations in Valencia in early 2001, moving its corporate headquarters from Century City to a new three-building complex north of Los Angeles, where it now operates a reservation call center. Princess employs about 1,300 in Southern California.

In New York Stock Exchange trading, Carnival shares rose $1.38 to close at $48.38; American depositary receipts of P&O; rose $1.38 to close at $34 on over-the-counter trading.

The world’s biggest leisure-cruise operator, Carnival runs its flagship Carnival Cruise Lines of “Fun Ships” aimed at young, bargain-hunting vacationers and other more expensive lines such as Holland America, Cunard and Seabourn. It also holds a large stake in Airtours, a British vacation bookings group.