Shares in ICI, the UK’s biggest chemicals company, soared more than 7 per cent today after it emerged that the Dutch predator Akzo Nobel had teamed up with a German rival to offer nearly £8 billion for the business.

ICI revealed that it had rejected an improved 650p per share indicative offer from Akzo, arguing that it still failed to recognise the group’s “full strategic value”.

But ICI shares climbed 41.5p to 618.5p as analysts said Akzo was either likely to return with a higher bid or go hostile and offer the cash to shareholders without a recommendation from the ICI board.

James Knight at Collins Stewart said: “I doubt Akzo will come back with a larger offer than 650p.

“But there is a chance of them going hostile. The key question is whether shareholders would accept 650p and I believe that it is possible.”

Martin Evans, analyst at Cazenove, added the takeover price could go as high as 750p if a third party enters the auction.

Both ICI and Akzo said today that discussions were continuing, yet ICI revealed that it had refused to grant the Dutch chemicals group access to due diligence information.

Akzo said it was “evaluating its options” ahead of a Takeover Panel deadline of August 9 to make a formal offer or drop the bid.

The Dutch group lodged an initial indicative offer of 600p per share at the beginning of June. The 650p per share bid would value ICI at £7.8 billion.

The increased offer follows a deal that would see Akzo sell on ICI’s adhesives and electronic materials businesses to Henkel, the German chemicals company, in the event of a successful takeover.

Akzo is more keen on ICI’s paints business, which includes Dulux.

The Dutch group said: “The exclusivity agreement with Henkel enables Akzo Nobel and Henkel to each focus on the business that offers them the most synergies, thereby meeting their respective stated strategic and financial objectives.

“It would also allow Akzo Nobel to return further cash to its shareholders.”

Acquiring ICI would increase Akzo's share of the worldwide coatings market from 10 per cent to around 15 per cent.

It would also give the group a bigger exposure to fast-growing emerging markets. Nearly a third of ICI’s sales are in Asia.

ICI has long been tipped as a takeover target after restructuring and slimming down its business to focus on higher-margin paints and adhesives.

The US groups Dow Chemical and DuPont, Germany’s BASF and India’s Reliance are also seen as potential bidders.

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