Imperial Chemical Industries PLC said Monday that it rejected an informal 7.2 billion pound ($14.2 billion) takeover bid by Akzo Nobel NV. Its shares soared more than 16 percent as analysts saw higher bids as a possibility.
ICI, which makes Dulux paints, said its board unanimously rejected the approach "on the grounds that it significantly undervalues ICI."
Akzo Nobel, based in Amsterdam, said ICI would be "a highly attractive addition to its focused coatings and chemicals business." The company had acquired the British chemicals company Courtaulds PLC for $3.7 billion in 1998.
Dow Chemical Co. of the United States, Germany's BASF Group and Reliance Industries Ltd. of India have also been rumored as potential suitors for ICI.
"A bid battle developing between Akzo and Dow Chemical or other interested parties cannot be ruled out, fueling speculation that ICI could ultimately fall to an offer of as much as 700 pence per share," said Jeremy Batstone, analyst at Charles Stanley.
ICI shares rose to 640 pence on the London Stock Exchange, well above Akzo Nobel's offer of 600 pence.
James Knight, an analyst at Collins Stewart in London, figured that Akzo Nobel might need to pay 650 pence to win ICI. A bidding war, he said, is possible, "though we think Akzo is in a unique position of having the synergy potential and financial firepower."
ICI employs around 4,000 people in the U.K.; Akzo Nobel has about 60,000 employees. Its shares fell 1.9 percent in Amsterdam.