After months of ruckus, Imperial Chemical Industries (ICI) has accepted $16.32bn (£8bn) Akzo Nobel’s indicative offer.

ICI accepted Dutch chemicals group’s offer, after it agreed to sweeten it to £6.7 from £6.5 a share over the weekend, as it came after a period of tense negotiations between the two companies and its advisers. Akzo will finance the deal by selling its adhesives and electronic materials businesses to Henkel.

After gaining support from the ICI, Akzo is now carrying out preliminary offer for the mutual business by August 9.

Initially, Akzo had approached ICI with £6-a-share indicative proposal, but the ICI board immediately turned it down as they were hoping the successful deal to be near £7 a share. Later, Dutch chemicals group increased the offer with 50 basic points and came up with £6.5 a share, but was also rebuffed by the board.

The board’s decision baffled some ICI shareholders as they assumed it low priced, which goaded the possibility of counter proposal. Dow Chemical, the US chemicals group, is weighting a possible rival to counter the Akzo’s bid, which has already hired investment bank Lazard to advise it on its “strategic options” for ICI. Above all, Dow Chemical has also shown its interest in Akzo.

Amid all these, the win-win situation for the Akzo is not certain, however investors have added panic showing apprehensions that Akzo is overpaying for ICI. To move ahead with the deal, both Akzo and Henkel need shareholders’ approval.

Some of its shareholders have pitched against the deal as TPG-Axon, which owns around 3.5% of Akzo, has cleared its stance that the company will not support the deal bona-fide. Nobody came forward to comment, however it’s clear that without shareholders’ clearance, the deal can’t be accepted.

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Via: Telegraph 86427