AkzoNobel's £7.7 billion takeover offer for Imperial Chemical Industries rejected

According to the Sunday Telegraph, Imperial Chemical Industries (ICI), a producer of paints, adhesives and specialty products, is rejecting a second takeover offer from its Dutch rival AkzoNobel for £7.7 billion. AkzoNobel offered 600 pence per share (about £7.2 billion) in its initial offer to acquire paint and chemicals giant ICI, but the ICI board considered the offer too low and rejected the offer.

In addition, AkzoNobel plans to revise its takeover offer, and the new offer is expected to be between 640 pence and 650 pence. AkzoNobel's new offer is made under the condition of making a firm offer before the August 9 deadline set by the Takeover Panel.

But ICI's board of directors reportedly does not intend to accept the new offer. Major investors, including Standard Life, which holds about 6% of ICI's shares, have expressed opposition to any offer below 700 pence. Nevertheless, the company said it might agree to negotiate if AkzoNobel is willing to bid higher.

The report further stated that AkzoNobel has held discussions with German chemicals company Henkel about acquiring ICI's national starch unit. AkzoNobel believes that if the deal with Henkel is successful, it will provide more support for its increased offer.

Despite the lack of synergies, AkzoNobel's acquisition of ICI is likely to attract competition from companies such as Germany's BASF, US Dow Corning and India's Reliance Industries, as well as private equity groups. However, sources said that potential bidders may face significant obstacles in the form of debt related to ICI's pension plan, which currently stands at £697 million in ICI's main UK fund, according to the company's last annual report.

Founded in 1926 by the merger of four British chemical companies, ICI fell into a trough in the 1990s, with low business profits and heavy debt. However, under the leadership of CEO John McAdam, the company has recovered again through cost cutting, business restructuring and the sale of businesses to reduce debt. ICI sold its fragrance business Quest to Swiss company Givaudan for £1.2 billion in 2023 and expects net sales of £400 million this year.