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NCL rejects Carnival bid
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December 15, 1999: 6:27 p.m. ET
Cruise operator NCL rejects Carnival as another cruise company takes a stake
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NEW YORK - (CNNfn) - Norwegian cruise operator NCL Holding ASA was in full sail Wednesday, as it formally rejected one hostile bid, sought further discussions with another company that bought a 20.6 percent stake, and apparently rebuffed an expression of interest from another U.S. cruise line.
The shares of NCL stock on the Oslo exchange were down about 6 percent to 33.3 Norwegian kroner, Wednesday, or $4.14 a share. But, that price is still above the 30 kroner a share offer made on Dec. 1 by Miami-based Carnival Corp., the world's largest cruise operator, that was formally rejected Wednesday. That offer was worth $1.7 billion including NCL's debt.
A stake from Singapore
It was also revealed Wednesday that Singapore's Star Cruises took a 20.6 percent stake in NCL, but it does not intend to bid for the full company. Still, NCL issued a statement saying it had asked to meet Star to discuss possible options.
"NCL has asked for a meeting with Star to map out what options the acquisition holds, compared with other possibilities the company is working on," said NCL's statement.
Star said that it planned to resume discussions with NCL regarding potential cooperation between the two companies.
"Further information regarding potential cooperation between the two companies will be released as soon as any agreement may be reached," Star said.
NCL said that the board believed that growth alone or strategic alliances with other companies presented better alternatives than that offered by Carnival.
"In the board's opinion, the offer price of 30 kroner per share is too low in relation to the value of NCL Holding ASA today and in consideration of its future outlook," said the statement from NCL, the world's fourth-largest cruise company and operator of Norwegian Cruise Lines. "On that background, the board advises shareholders against accepting Carnival's bid."
Carnival mum on plans
Officials with Carnival (CCL), with lines including Cunard, Carnival Cruise Lines, Windstar, Seabourn and Holland America, did not have a comment on the rejection, or whether they plan to continue their bid for the company. However, it said since launching its bid, that its offer fully valued NCL and its Norwegian Cruise Line operation and that it would even sell its NCL shares for a better cash offer.
But, analysts in the U.S. were not sure that Carnival's interest was over with Wednesday's action.
"My guess, and this is purely a guess, is they'd be willing to take the price up but keep in the 30 (kroner range)," said John Rohs, analyst with Schroders. "I think CCL's interest remains very high, not withstanding the formal rejection. It would not surprise me if perhaps there was some sort of joint effort bidding for NCL."
Another bidder in the picture
The Norwegian company rebuffed interest expressed this week from the owners of privately held Premier Cruise Lines, the Miami-based operator of The Big Red Boat out of U.S. ports.
"We had contacted NCL to see if they had any interest in pursuing a transaction with us. At the current time, they're not interested," said Michael Lewitt, vice chairman of Premier and the chief operating officer of hedge fund Harch Capital Management, Premier's largest shareholder.
Lewitt said that Premier remains interested in NCL, despite Star's stake and the initial rebuff by NCL.
"These consolidation trends, you can't fight them," he said. "The companies that are NCL's size on down need to consolidate. That's a better alternative than letting Carnival grab everything."
He said he believes NCL is worth more than the $1.7 billion Carnival bid.
"Whatever the company is trading at today, NCL is an under-performing company. It's got great assets and a good franchise."
Premier has eight ships and expects to post revenue this year of $185 million and earnings before taxes, depreciation and amortization of $16 million, Lewitt said.
NCL's share price fell to a low at 30.10 kroner, or
$3.72, on Star's statement that it did not intend a bid for the full company, before clawing back some losses to stand 33.30 kroner at the close of trade on the Oslo bourse.
Trade data from the exchange showed that a single block of 26.8 million shares, or about half of Star's stake, was traded at 35 kroner per share.
Carnival's stock was down 1-3/4 to 44-1/4 at the 4 p.m. composite close in New York Wednesday. 
-- from staff and wire reports
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Carnival Corporation
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