ICI Spurns Akzo

Akzo Nobel has disclosed that it made an informal $14.2 billion cash offer for Imperial Chemical Industries. The British firm says it rejected the bid of $11.88 per share "on the grounds that it significantly undervalues ICI."

The Netherlands-based Akzo, which bought another big British firm, the marine paint maker Courtaulds, in 1998, says ICI would "represent a highly attractive addition" to its coatings and chemicals businesses. But ICI, which markets Glidden and Dulux house paints, counters that it is very confident in its own "strategy and strong growth prospects."

Analysts suspect the bidding may not be over, and some suggest companies such as Dow Chemical, DuPont, or BASF might enter the fray. Shareholders bid up ICI's stock to $12.57 on Monday, a more than 15% rise compared with Friday's closing.

Akzo, soon to be flush with cash after the $14.4 billion sale of its Organon health care business to Schering-Plough, says it may come back with another bid. The company released a statement vowing to "continue to evaluate all strategic opportunities, including ICI."

ICI has become a more attractive target since slimming down and reducing its debt. During the past year-and-a-half, it has sold its Quest International Flavors & Fragrances unit to Givaudan and its oleochemicals operations to Croda International. Over the same period, the firm???s share price has risen 85%.