The once-mighty Imperial Chemical Industries (ICI) may soon no longer exist. The decision by the Dulux paints group to open the books to Akzo Nobel is just one of many hoops that the Dutch buyer has to get through, not least winning approval from its own shareholders, no foregone conclusion. The ICI shares, at 634½p, are some way short of the 675p implied offer price. A deal is no certainty and there is only a slim chance of anyone else entering the auction.

Yet, regardless of all that, this is a psychologically important step for the ICI board, chaired by Peter Ellwood, the former Lloyds TSB chief. After 81 years of independence, ICI has signalled a willingness to capitulate, something never countenanced before. Given the weight of history on the company, this must have been a hard decision.

For anyone over the age of 40, the idea of ICI surrendering to anybody raises eyebrows. In decades past, ICI has been Britain’s biggest company, biggest manufacturer and biggest exporter. It was the first British company to make £1 billion in profit (in 1984). Its scientists helped to develop everything from polythene to beta blockers. When the acquisitive Lord Hanson tried to launch a hostile bid in 1988, he was sent packing in one of the most brilliant of bid defences. Of course, the gloryI years are long gone. Once the drugs unit, Zeneca, now Astra-Zeneca, and the farm chemicals division were demerged, ICI shrank in stature and influence. An ill-judged acquisition strategy, an addiction to debt and years of neglecting the giant pension fund worsened the patient further. Ellwood and his chief executive John McAdam have steadied things and the revival in the stock market over the past four years has reduced the pension deficit to manageable proportions.

The ICI directors are an unsentimental lot. They include Rick Haythornthwaite, who crowned his own career by selling another British blue chip, Blue Circle Industries, that time to the French. But it will still have been a momentous decision to give the green light to a foreign takeover approach.

However, at 19 times prospective profits and a 45 per cent premium to the prevailing ICI price before Akzo came along, the suggested take-out price looks generous. Faced with the prospect of certain cash today and lots of it, or more years being buffeted about by the fierce and unpredictable winds of the international chemicals industry, it’s no surprise the ICI board is prepared to throw in the towel.

patrick.hosking@thetimes.co.uk

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