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Amsterdam - Dutch chemicals group Akzo Nobel agreed to buy Britain's ICI for £8 billion ($22 billion) yesterday to create the world's biggest paint-maker and retain its lead in industrial coatings.
Akzo had to raise its bid twice to secure a deal but still has to win shareholder support and faces opposition from at least one major investor, US fund TPG-Axon.
"This is an overpriced deal, at the top of the cycle, and we are not supportive," TPG-Axon, which owns about 3.5 per cent of Akzo, said.
The price was "almost twice the valuation of Akzo, for an inferior company with weak cashflow and significant exposure to the US housing market", TPG said.
Akzo, whose coatings are used on Airbus' A380 superjumbo, said it would pay 670p a share in cash for Imperial Chemical Industries (ICI), which makes Dulux paints. That is 22 per cent above ICI's closing share price on June 15, the day before it announced a bid approach from Akzo.
Shares in ICI, Britain's biggest chemicals company, closed 2.8 per cent higher at 642p, about 4 per cent below the offer price and reflecting some doubts whether Akzo shareholders will back the deal. Akzo shares, helped by an upturn in European stock markets, rose 2.4 per cent to €58.05 ($108.25).
Akzo sought to sweeten the ICI deal for shareholders by saying it could return up to €3 billion to them from next year, on top of an existing cash return of €1.6 billion.
In a side deal, German consumer products group Henkel will buy ICI's adhesives and electronic materials units for £2.7 billion, conditional on Akzo buying ICI.
- Reuters
