Akzo Nobel will acquire ICI for 8 billion ($16.3 billion), or L6.70/share. The offer is a 22% premium to ICI s closing price of 5.49/share, the last trading day prior to Akzo s bid. The bid, however, faces opposition from at least one major Akzo shareholder, TPG-Axon, according to a Reuters news report. Akzo CEO Hans Wijers says he is convinced that Akzo shareholders will see the acquisition will be a good deal for them. Akzo made a preliminary bid for ICI of 6.00/share, but sweetened the offer to 6.70/share last week after ICI rejected the offer, saying it undervalued the company. Akzo says it was able to up its offer because of an exclusive agreement with Henkel, under which Henkel will purchase ICI subsidiary National Starch and Chemical's adhesives and electronic materials business for 2.7 billion, following the completion of Akzo's proposed offer for ICI. The deal "will create a leading global coatings and specialty chemicals company with a diversified geographic presence and well developed access to fast-growing markets in Asia-Pacific, particularly China and Latin America," says Akzo CEO Hans Wijers. The combined Akzo-ICI will take approximately 15% of the global coatings market, ahead of PPG-SigmaKalon, which has a 10% share. The addition of ICI will bulk up Akzo global position in several of the world's largest paints markets; and significantly strengthen its decorative coatings business with proforma combined sales of approximately 3.7 billion, Akzo says. ICI is a leading architectural coatings maker in North America, and is the largest supplier to the emerging markets, Wijers says. The deal will strengthen Akzo s weak position in the North American and Asian architectural coatings markets, the company says. Akzo s offer to ICI is 10.9 times Ebitda for last twelve months for the businesses to be retained by Akzo. Wijers says it is too early to discuss job cuts and any possible antitrust issues. Akzo says, however, it expects cost savings of about E280 million/year. Savings from raw materials and streamlining operations will each account for 23% of that total, and savings from SG&A will account for 54%, Akzo says.
