Akzo sweetens ICL bid to £8 bn

LONDON: Akzo Nobel, the world’s largest maker of paints and coatings, raised its bid for Imperial Chemical Industries a second time to £8 billion, moving a step closer to a takeover. Akzo offered 670 pence a share in cash and gained access to ICI’s books, the companies said. The price is 22% higher than on June 15, the day before Arnhem, Netherlands-based Akzo first bid. ICI shares rose 2.2% to 645.5 pence.

The Dutch company plans to sell ICI’s US National Starch unit to German consumer-chemicals supplier Henkel KGaA for £2.7 billion. The rest of ICI, the maker of Dulux and Glidden paints, would boost Akzo’s revenue by almost 40% to $25 billion and bolster paints sales in the US and China. “ICI shareholders seem likely to accept,” said James Knight, an analyst at Collins Stewart in London.

“The biggest hurdle by far remains approval by Akzo shareholders. We estimate the chances as better than evens, but difficult to call. The value of the Henkel deal, the level of synergies and other goodies will be crucial.” Knight rates Akzo ‘buy’.

Akzo shares were little changed at e59.66 as of 11:45 am local time. ICI was trading at 640 pence, giving a market value of £7.65 billion. ICI spurned previous bids of 600 pence and 650 pence as too low and regulators set an August 9 deadline for a formal bid. For Akzo, the agreement with Henkel would allow more cash to be returned to shareholders at a time when some are baulking at the price.

TPG-Axon, a US investment firm and shareholder of Akzo, said it was concerned about the paint maker’s approach when the bid stood at 650 pence. TPG-Axon has said it’s one of Akzo’s largest shareholders, with a 3.5% stake.

Akzo’s takeover offer amounts to 1.65 times ICI’s annual sales and is 15.9 times operating profit. Under the terms of the proposed deal, Henkel would acquire ICI’s adhesives and electronic-materials units, both part of the National Starch division. The German company was already planning to combine its own consumer and industrial adhesive units, forming a business with sales of e5.5 billion