Azko Nobel CEO Hans Wijers in London on Monday. (AFP)

London/Amsterdam, Aug. 13 (Reuters): Dutch chemicals group Akzo Nobel NV has agreed to buy Britain’s ICI Plc for £8 billion ($16.2 billion) to boost its position as the world’s biggest industrial coatings maker.

However, Akzo still has to secure shareholder support for the deal amid newspaper reports that at least one of its major investors, US fund TPG-Axon, is opposed to the tieup.

Shares in ICI were trading about 5 per cent below Akzo’s per-share offer of 670 pence in cash, reflecting some doubts whether Akzo shareholders would back the deal, even as the Dutch chemicals group announced that it was considering the payout of 3 billion euros ($4 billion) to shareholders next year. Akzo’s price for the maker of Dulux paints is 22 per cent above Imperial Chemical Industries’ (ICI) closing share price on June 15, the day before it announced a bid approach from Akzo.

In a side deal, German consumer products group Henkel confirmed it had agreed to buy ICI’s adhesives and electronic materials businesses for £2.7 billion, conditional on Akzo buying ICI.

Buying ICI would strengthen Akzo’s leading position in the world’s $85-billion-a-year coatings industry, giving it a market share of about 15 per cent and increasing its exposure in North America and emerging markets, as well as in decorative coatings.

Annual revenue for the combined group will be over 15 billion euros, Akzo chief executive Hans Wijers said.

“There is topline growth and the transaction as a whole is accretive to earnings,” Wijers said, adding that he felt “pretty good” on getting competition approval for the deal.

However, some analysts and investors believe Akzo is paying a high price at the top of the economic cycle.

“Akzo Nobel can create significantly more value at lower risk if it would not acquire ICI,” Rabobank analysts wrote in a research note, advising Akzo investors to vote against the deal. During mid-day trading, Akzo shares were up 2.4 per cent at 58.06 euros. ICI shares were up 1.7 per cent at 635 pence.

Shared history

Akzo, which once described ICI as a “beautiful company” to acquire, clinched the deal after raising its price twice since June. ICI was founded in 1926 from four companies, including Nobel Industries, the business created by Alfred Nobel, the inventor of dynamite, that later became part of Akzo Nobel.