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Akzo-ICI combination an „exciting” idea

Akzo, the world's biggest supplier of paint, and Imperial Chemical Industries Plc would make an „exciting” combination as disposals by the pair make them a better fit, a Collins Stewart analyst said.

Akzo Nobel NV could pay as much as 600 pence a share, or £7.15 billion ($14 billion), for ICI and still add to profit in the second year, analyst James Knight said in a note today. Shares of London-based ICI, Britain's biggest maker of specialty chemicals, rose 2.4% to 426 pence. „A combination of the two is an exciting prospect,” said London-based Knight, who has „buy” ratings on both stocks. „It's doable and would create significant synergy benefits.”

A merger would make sense after ICI last month sold its Quest International fragrances unit and as Akzo prepares to spin off its drug division next year, Knight said. The pair would form a „coatings behemoth” better placed to target growth markets such as Asia and delivering annual savings of as much as €290 million ($518 million), according to the analyst.

Shares of Akzo, based in Arnhem in the Netherlands, rose 44 cents, or 1%, to 44.92 euros. The stock has gained 15% this year, giving the company a market value of €12.9 billion. That's less than the 28% advance at ICI, which has a value of £5.07 billion. (Bloomberg)