ICI 'to reject second Dutch offer'

Dulux paint maker ICI is set to reject a second higher takeover approach from Dutch suitor Akzo Nobel worth £7.7bn (€11.4bn), it was reported today.

ICI, which employs around 3,500 people in the UK, snubbed an initial £7.2bn (€10.7bn) approach from Akzo in June, saying that the 600p a share proposal “significantly undervalued” the business.

Now the board is set to confirm its rejection of Akzo’s latest offer – worth between 640p and 650p – to the stock exchange as soon as tomorrow, the Sunday Telegraph newspaper reports.

The latest approach comes less than two weeks before a “put up or shut up” deadline on August 9, by when Akzo must say whether it will make a firm offer.

ICI’s chief executive John McAdam is currently unwilling to open the firm’s books to the Dutch outfit, but the company could hint at a change in its attitude if the price is raised again, the reports say.

Leading investors in the business such as Standard Life are said to be unwilling to sell for less than 700p a share, valuing ICI at almost £8.4bn (€12.5bn).

Akzo has been seen as a likely bidder for ICI since it agreed to sell its pharmaceuticals unit Organon BioSciences to Schering-Plough for €11bn in March. Both ICI and Akzo were unavailable for comment.

ICI’s paints business has long been a target for Akzo, whose own operations include the Crown Paints brand. The Dulux business has strong market share in Britain, eastern Europe and Asia, although Akzo may have to sell Crown Paints to overcome competition issues if the deal goes ahead.

Akzo is also said to have held talks with German chemicals firm Henkel over buying ICI’s starch operation, if it eventually lands the business.

ICI is expected to post underlying pre-tax profits of £140m (€208m) for the second quarter on Thursday, marginally ahead of last year’s £137m (€204m).

The company has major bases in Slough, Berkshire; Stowmarket, Suffolk; Prudhoe, Northumberland; Birmingham and Hull. In total, the firm has around 26,000 staff in more than 50 countries.

Akzo Nobel was formed in 1994 through the merger of Dutch firm Akzo with Swedish company Nobel Industries and has 62,000 staff in 80 countries.

In 1998 the business bought Essex-based fibres firm Courtaulds.