ICI and Akzo

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ICI has experience of fighting off unwelcome acquisitions. And Akzo may find itself in a difficult position if ICI wins again. Unless this bid, like Hanson’s in 1991, marks the ‘top’ in the currrent M&A cycle.
News that ICI has asked the takeover authorities for clarification of Akzo’s bid intentions, brings back memories of an earlier attempt to acquire what was then one of the UK’s largest companies.

Hanson had bought a 3% stake in ICI, and this kicked off massive takeover speculation, as Hanson was a serial acquirer on an epic scale at that point.

But in the end, they withdrew without ever having made a formal bid for the company. Will the same happen with Akzo this time?

As a former ICI employee, I must declare an interest and admit my sympathies are with the company in resisting the current approach. I am not at all sure that Akzo’s track record with Crown paint in the UK (which is No 2 to ICI’s Dulux), inspires a lot of confidence in their ability to run ICI’s business better.

However, I also feel a bit sorry for Akzo. When they made their famous comment last November about ICI being a ‘beautiful company’, I really rather doubt that they expected to start a fever of takeover speculation. Even when they successfully sold their pharma business for €14bn in cash in March, they didn’t seem in any hurry to rush out and make a formal bid.

But there has since been speculation that Akzo could now be a bid target themselves, if they don’t quickly recycle the money into a bid of their own. Instead of being able to rest on their laurels after their pharma sale, perhaps they now feel between a rock and hard place – either they acquire ICI, or risk being acquired themselves?

Dutch law is sympathetic to a beleaguered company, however. So there is another potential outcome. The Hanson bid for ICI in 1991 marked the peak of takeover speculation at that time – maybe the current Akzo bid will prove a similar indicator.

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