Britain's ICI has rejected an improved 7.8 billion-pound ($15.9 billion) takeover proposal from Dutch rival Akzo Nobel, saying the 8% increase in the offer price is not enough.
ICI, the maker of Dulux paints, said on Monday that the two sides were still in talks after it rejected a 650 pence a share cash proposal from Akzo but it had not opened its books to the world's largest maker of industrial coatings.
Akzo, the maker of Crown paints, said it had teamed up with German consumer products group Henkel over its proposed bid, but there was no certainty it would make a better offer. Henkel would take on ICI's adhesives and electronics materials business if a deal went through, Akzo said.
Acquiring ICI would give Akzo a boost in the $85 billion coatings industry, allowing it to increase worldwide market share from around 10% to around 15%, ahead of second-ranked Sherwin Williams's 9% share.
"Akzo Nobel is evaluating its options. Whilst discussions continue, Akzo Nobel will remain financially disciplined," said in a statement.
ICI, which rejected a 600 pence a share proposal from Akzo in June, said the new proposal was still too low.
"The board of ICI considered this revised proposal and unanimously rejected it on the grounds that it failed to recognise the full strategic value of ICI," it said in a statement.
"ICI met with Akzo to explore whether it could be increased. This meeting did not result in an improved proposal. Discussions are continuing, however, ICI has not granted Akzo access to due diligence information."
A deal with ICI, which makes 27% of its sales in Asia, would also give Akzo a bigger exposure to fast-growing emerging markets and help it fix its underperforming European decorative business, with minimal antitrust issues, analysts said.
ICI, Britain's biggest chemicals company, has long been tipped as a bid target after slimming to focus on higher-margin paints and adhesives. A failure to buy ICI would make Akzo vulnerable to takeovers, analysts said.
U.S. groups Dow Chemical and DuPont, Germany's BASF and India's Reliance might also bid for ICI, according to analysts.
Akzo shares ended at 60.59 euros on Friday while ICI's closed at 577 pence.