After launching a hostile bid for P&O Princess, Florida-based Carnival received an initial rebuttal from P&O, which said it would not defer an EGM scheduled for January. Our response to Carnival is based on two clear criteria - value for our shareholders and deliverability. Their proposal falls short on both counts, said Peter Radcliffe, chief executive officer of P&O Princess.

However if Carnival makes an offer before18 January, that the P&O Board believes is 'credible and superior' then both alternatives can be considered with the Board's recommendation before the EGM.

Peter Radcliffe, said today that the company must be certain it is not jeopardizing its merger with Royal Caribbean in return for a proposal that turns out to be a spoiling tactic designed to disrupt the creation of significant value for P&O Princess' shareholders.

Shareholders will receive a circular before the end of December recommending the approval at an EGM on 14 February of the merger with Royal Caribbean.

The timetable we have set in place today both honours our agreement with Royal Caribbean and still gives time for Carnival to put forward a credible, deliverable and more valuable transaction. said Peter Radcliffe.

The merger of P&O and Royal Caribbean would create the world's biggest cruise ship operator based on number of berths, bringing substantial savings at a time of depressed demand for cruising holidays.