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ICI agrees deal with Akzo Nobel

13/08/2007

British chemicals giant ICI has agreed to be bought by Dutch rival Akzo Nobel in a £8 billion deal.

A joint statement issued by the two companies today stressed that the proposed takeover would provide the opportunity to "create a global leader in coatings and one of the largest specialty chemicals companies in the world".

Confirmation of the 670p-per-share deal comes after ICI announced earlier this month that it had received such an offer from Akzo, which had a previous 650p-per-share offer rejected by the British company in July.

Reports had previously suggested that some Akzo shareholders, including fund manager TPG Axon, were opposed to the deal because they were against paying too much to assume control of ICI.

However analysts believe that the takeover, which comes after Dulux paint maker ICI agreed that Akzo could undertake certain limited due diligence in relation to its bid, is likely to be successful.

The price agreed by the two companies represents a 22 per cent premium on ICI's closing share price on June 15th - the last business day prior to the company announcing it had received an approach from Akzo, owner of the Crown Paints brand.

As part of the deal Akzo has entered into an agreement with German company Henkel to sell ICI's adhesives and electronic materials divisions to the group for £2.7 billion. However the Dutch firm stressed that the transaction is not a condition to the completion of its takeover deal with ICI.

Akzo expects to achieve annual pre-tax operation savings of some €280 million (£189 million) in relation to the acquisition of ICI's paints business alone.

Commenting on the planned takeover Akzo chief executive Hans Wijers said: "We will create a leading global coatings and specialty chemicals company with a diversified geographic presence and well developed access to fast-growing markets in Asia-Pacific, particularly China and Latin America."

ICI chief executive John McAdam added: "Akzo Nobel has today made a compelling offer which delivers full value for ICI, reflecting ICI's strong future growth prospects and strategic opportunities.

The chemicals company became a takeover target after slimming down its business to focus on the provision of high-margin paints and adhesives.




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