City sources tonight denied reports that Atticus Capital, the activist hedge fund, has been buying shares in Akzo Nobel, the Dutch chemicals group.

The funds group was said to have bought a stake of between 1 per cent and 5 per cent in Akzo with the intention of ensuring the company's management did not make an increased offer for ICI.

However City sources have told The Times that Atticus has not been buying in the market. The hedge fund is understood to have no holding in Akzo Nobel.

The board of ICI, the British paints and adhesives group, turned down a £7.2 billion indicative offer from Akzo earlier this month.

Akzo said yesterday that it had had no contact with Atticus and was not aware that the fund had bought its shares after The Business reported that the US fund had bought a stake.

Atticus is already entrenched in another Dutch bid situation, where it is putting pressure on Barclays to drop its bid for ABN Amro. With less than 1 per cent of Barclays under its control, Atticus has sought to derail Barclays’ £43 billion offer for the Dutch bank, publicly accusing the British bank’s directors of a strategy that would destroy value.

Akzo has already received a clear message from its existing shareholders that there is little appetite for an expensive takeover of ICI. In a recent round of consultations with major shareholders, Hans Wijers, Akzo’s chief executive, was told that an overgenerous bid for ICI would not get support.

ICI shares have drifted lower from a high of 639p last week, following disclosure of the 600p per share offer made by the Dutch on June 4. ICI was down 1 per cent yesterday to 614p, suggesting the stock market is less convinced that Akzo will raise its bid as high as 650p, a level that might compel the British company into opening talks.

Akzo is world leader in coatings, with big positions in paints for industrial, marine and aviation applications but the Dutch group covets ICI’s Dulux brand, which leads the field in decorative paints. Prior to disclosure of the Akzo offer, investment analysts put a fair value on ICI of about 500p per share.

Founded in 1995 by Tim Barakett, Atticus has about $17 billion (£8.5 billion) under management. Its UK arm is run by Nathan Rothschild and has agitated against ambitious bid strategies. In collaboration with The Children’s Investment Fund, it helped to topple Werner Seifert, the chairman of Deutsche Börse, who was forced out after Atticus took an 11.7 per cent interest.

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