Nervous ICI shareholders sell below Akzo offer

23 August 2007 15:07  [Source: ICIS news]

By Lucy Craymer

 

LONDON (ICIS news)--ICI shareholders are selling their shares 30.5p (61 cents) below the Akzo Nobel offer out of fears that the takeover might not happen, an analyst said on Thursday.

 

Rothschild investment director Rupert Howard said Akzo Nobel shareholders would have to vote to approve the deal at the end of October.

 

“It looks like the vote will be fine, but part of the reason the shares are below the 670p offer price is the slim chance that things change so much in the next two months that shareholders block the deal,” he said.

 

“It’s highly unlikely… but still a risk that is reflected in the 4.5% discount between the share price and the deal price,” said Howard.

 

Akzo Nobel has offered 670p/share but shares are currently being traded at 639.50p.

 

Not only are shares being sold for less than what Akzo Nobel has offered but sellers will also miss the second ordinary interim dividend of 5p/share from the takeover.

 

The volume of shares sold from 16-22 August was over three times higher year on year. And while this can partly be blamed on market turmoil, concerns over the deal have been high.

 

“The debt issuance crisis that developed in July will have a significant impact on all M&A activities in the second half of 2007, but in particular the activities of private equity buyers,” said Peter Young, president of New York-based Young & Partners.

 

For those leveraged deals that have already been announced, furious negotiations were taking place between investment banks and buyout firms as banks try to convince buyers to walk away from their deals, he said.

 

“Many investment banks are trying to get borrowers to cancel their deals and are offering to pay the borrowers’ break-up fees and expenses,” Young said.

 

There have also been refuted reports in the market that Henkel is going to have trouble financing its proposed £2.7bn ($5.4bn/€4bn) deal with Akzo Nobel for ICI’s adhesives and electronic material businesses.

 

Subsequent reports that Schering-Plough might not be able to pay Akzo Nobel the €11bn ($14.9bn) for the Organon drugs unit raised further concerns but were also denied.

 

($1 = £0.50/$1 = €0.74)

 

By: Lucy Craymer
+44 20 8652 3214

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