Chemicals giants agree 670p cash takeover deal, as UK group becomes the latest to fall into foreign ownership

ICI, the FTSE 100 chemicals group, has agreed an £8 billion cash sale to Akzo Nobel that will bring together the makers of Dulux and Crown paint.

The Dutch group said today that it had won the agreement of the ICI board for an offer at 670p a share.

The deal comes two months after Akzo made its first indicative offer for ICI.

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

He said that acceptance of the offer was in shareholders' "best interests".

Akzo said that the combination of the two groups would create a global leader in coatings and one of the largest speciality chemicals groups in the world.

Hans Wijers, the Akzo Nobel chief executive, said that the deal would be a "transformational step" for the group.

Akzo first made an approach to ICI in June, with a 600p-a-share offer that valued the UK group at £7.2 billion.

However, the ICI board, led by the chairman Peter Ellwood, held out for a higher offer.

A 650p-a-share offer was also rejected.

The Dutch group had until 10am today to make a statement, having been given extra time by the Takeover Panel with ICI’s blessing.

Akzo has also agreed a separate deal with Henkel, signed this morning, under which the German consumer goods group will buy parts of ICI's American business.

An ICI takeover represents the latest chapter in an unfolding story of important British companies falling into foreign hands.

Recent foreign purchases include Pilkington, the glassmaker, BAA, the former British Airports Authority, Boots, P&O and Corus, formerly British Steel.

ICI shareholders will also be entitled to the interim dividend already announced of 4.95p and a second interim of 5p.

The deal is one of the few unaffected by the turmoil on world markets because Akzo has the €11 billion (£7.4 billion) proceeds of the sale in March of Organon, its pharmaceuticals offshoot.

Indeed, falling share prices are more likely to commend the cash on offer to ICI shareholders.

But Akzo could face opposition from a minority of shareholders. At least one hedge fund, TPG-Axon, has said that it will vote against the ICI purchase.

Akzo has also agreed to sell ICI’s adhesives and electronic materials business to Henkel for £2.7 billion, a deal that it is hoped will alleviate shareholders’ concerns.

The Dutch are particularly attracted to ICI’s Dulux paints business.

After the deal is concluded, John McAdam, the chief executive and the architect of a huge restructuring programme at ICI, is expected to leave.

Imperial Chemical Industries was created in 1926 from the merger of four concerns and became one of Britain’s leading industrial companies, the discoverer of polythene and the inventor of the word plastics.

In 1988 the company successfully fought off a hostile bid from Hanson in one of the City’s most stirring takeover battles.

But in recent years the company has shrunk both in size and importance, notably with the 1993 sale of Zeneca, the pharmaceuticals business now part of AstraZeneca.

At its height it was known as the bellwether of the Stock Exchange because ICI shares were seen as the most reliable indication of which way the whole market was moving.

(Published by Times Online, August 13, 2007)

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