THE Dutch chemicals group Akzo is expected to clinch its long-running pursuit of ICI tomorrow by agreeing an £8 billion takeover.

Sources close to the talks between the companies said ICI was set to recommend an offer pitched at 670p a share, which would value the British firm at just over £8 billion.

Akzo may face difficulty convincing some shareholders it is not overpaying. Unofficial surveys of Akzo shareholders have shown resistance to a price of more than 675p, indicating the offer has been carefully pitched.

Hedge funds that have bought into the Dutch company may yet cause problems. Big stakes have been bought by Paulson & Co, the New York-based hedge-fund giant, and London-based funds including Polygon, Centaurus and Eton Park.

A fortnight ago TPG-Axon, an $11 billion (£5.4 billion) fund managed by former Goldman Sachs partner Dinakar Singh, wrote to Akzo stating its opposition to the ICI deal. TPG-Axon owns a 3.5% stake in Akzo.

The hedge funds are understood not to oppose the logic of the deal, but the price. They are willing to listen to Akzo’s explanation of its merits this week.

A source at one of the funds said: “The deal is fine but there’s no counterbid, so why are we paying so much? It’s totally unnecessary.”

If the deal does go through, it is not clear if there will be any continuing role for John McAdam, ICI’s chief executive, or Peter Ellwood, chairman.

The merger will bring together the makers of two of the world’s largest paint brands. ICI makes Dulux and Akzo makes Crown. Akzo has done a side deal with Henkel, the German group, to sell ICI’s electronics and adhesives operations.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange