TaxCorporate TaxP&O shareholders in tax scare

P&O shareholders in tax scare

P&O Princess Cruises has rejected claims that the dual-listing structure in its proposed merger with Royal Caribbean Cruises would result in the loss of its tax-exempt status.

The news comes after US-based Carnival Corporation, which last night upped its hostile takeover bid for P&O to £3.5bn, issued a statement casting doubt on the merger’s DLC structure.

Carnival said: ‘We remain open to exploring with you the prospects of offering an alternative structure to your shareholders which retains all of the perceived benefits of the proposed DLC structure with Royal Caribbean.

‘In analysing the DLC structure proposed by yourselves and Royal Caribbean, our tax advisers believe that there is a significant risk that the DLC structure will lose its Section 883 tax exemption for a significant portion of the combined companies’ income, and that the amounts involved would be material.’

But P&O responded that KPMG, its tax advisers ‘have confirmed that their advice with respect to the tax treatment of the agreed DLC combination remains unchanged.’

Carnival made a hostile bid for P&O in December, saying the British group’s management was ignoring the interests of its shareholders.

The $7bn (£4.87bn) merger between Royal Caribbean and P&O was announced in November. Shareholders are due to vote on the merger on 14 February.

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