ICI 'rejects takeover bid'

Dulux paint maker ICI is understood to have turned down a takeover offer from Dutch rival Akzo Nobel valuing the group at around £7.2bn (€10.6bn), a report suggested today.

The chemicals and paint giant is said to have rebuffed an indicative 600p-a-share offer made by Akzo Nobel for being too low, according to The Sunday Telegraph.

Akzo Nobel, which makes Crown paint, reportedly made the informal offer in the past few weeks and is now understood to have hired investment bank Morgan Stanley to advise it a potential formal approach.

ICI, which was unavailable for comment, has seen its shares soar over the past year as bid speculation has circled the firm.

The group’s share price has reached seven-year highs as investors anticipate a bidding war, with a number of parties thought to be interested in a takeover.

Akzo Nobel has been tipped as the most likely suitor, but US company Dow Chemicals is also rumoured to be setting its sights on ICI, as is India’s Reliance and a host of private equity firms.

Dow was reported to be looking at tabling a 620p-a-share offer in April, which would value ICI at £7.4bn (€10.9bn).

The London market has been anticipating a bid for ICI after the group made two disposals last year, including the £1.2bn (€1.8bn) sale of its flavours and fragrance operation Quest.

The sales helped cut ICI’s debt mountain and narrow its pension scheme deficit.

But ICI’s pensions deficit is still said to stand at around £697m (€1bn) despite the cash injection.

The pensions gap could present a hurdle to potential suitors, as it is believed that ICI’s pension fund trustees are planning to play a central role in any takeover negotiations.

Pension scheme funding is becoming increasingly important in corporate takeovers as trustees look to secure the retirement benefits of members.

The trustees of Alliance Boots’ scheme are threatening to try and block a £11.1bn (€16.4bn) private equity-backed takeover of the group if its funding demands are not met.