UK paint and chemicals giant ICI has rejected a £7.2bn bid approach from its Dutch rival, Akzo Nobel, saying it undervalued the company.
ICI shares closed up 15.6% at 634.5p in London this evening after it had turned down the proposal that valued it at 600 pence per share.
Akzo's best-known paint brand is Crown Paints, while ICI owns Dulux.
'Akzo Nobel will continue to evaluate all strategic opportunities, including ICI, based on a disciplined and value-driven approach to earnings and returns over cost of capital,' Akzo said in a statement.
Akzo said there was no certainty it would make a further proposal to ICI or that any offer would result.
Speculation of a bid for ICI grew after Akzo sold its drugs unit in March for €11 billion. US group Dow Chemical and Germany's BASF have also been tipped as possible bidders for ICI.
The coating industry is very fragmented, with Akzo Nobel only accounting for around 9% of global market share and the addition of ICI could potentially close the gap in its decorative coatings geographical coverage in the US, Asia and Latin America, UBS said in a recent report.
