Akzo Nobel shares undervalued - Citigroup

20 November 2007 12:23  [Source: ICIS news]

LONDON (ICIS news)--Akzo Nobel shares undervalue the cash and profit generating potential of the new company, which will include UK coatings company ICI, a Citigroup report released to the media on Tuesday said.

 

Citigroup's "buy" rating is driven by the low valuation of the Dutch company’s shares relative to the diversified chemicals sectors the report said.

 

The ICI acquisition "still appears to be on track for January closing", it said, adding that the deal is likely to enhance its 2007 diluted earnings per share estimate of €4.07 ($6.02).

 

“We understand that nothing yet has slipped, although clearly with the deal subject to three regulatory authorities, this remains a risk."

 

Citigroup also reduced its risk rating after Akzo Nobel completed its $11bn sale of Organon BioSciences to Schering-Plough.

 

"There is now no need for bridging finance for the purchase of ICI and management attention can now focus more clearly on the acquisition and subsequent integration of the British company," the report said.

 

Akzo Nobel’s shares were trading up 1.42% at €50.76. Citigroup has a target share price of €70.

 

($1 = €0.68)

By: Lucy Craymer
+44 20 8652 3214

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