The Takeover Panel has told Akzo Nobel that it must make a firm offer for ICI by August 9 or abandon its efforts to acquire the British paints and adhesives company.

The panel’s “put up or shut up” ruling was issued after a request from ICI, which has been on tenterhooks for the past month, after its rejection of an indicative £7.2 billion offer from the Dutch chemicals rival.

Akzo approached ICI with a 600p-a-share offer on June 4, but the Dutch company has failed to make a formal bid or signalled any intention that it will increase its indicative offer.

Akzo, which is the world leader in industrial coatings and pigments, is attracted by Dulux. ICI’s strong decorative paints brand.

The Dutch company may soon suffer from an embarassment of riches, having sold Organon, its pharmaceutical unit, for €11 billion last March. The cash proceeds of the deal would be enough to finance a bid for ICI, but Hans Wijers, Akzo’s chief executive, has insisted that he would rather give the cash back to Akzo shareholders than overpay for an acquisition.

Akzo’s shareholders – which include Brandes Partners, the San Diego-based fund management group that owns 6.8 per cent, and ING, of the Netherlands, with 5.5 per cent – are believed to have told Akzo that they would not support an expensive bid.

Several ICI shareholders, including Standard Life, have signalled that a sale would require a significant premium to the ICI share price, currently 614p.

Collins Stewart, the brokerage, believes that Akzo will have to make a higher offer if the Dutch group is not to find itself in a vulnerable position.

James Knight, a Collins Stewart analyst, suggested that Akzo would need to offer up to 650p for ICI, but a decision to walk away might spark a private equity bid the Dutch company.

Some analysts believe that Akzo has adopted a strategy of silence in order to reduce the heat in the ICI share price, which has been buoyed by bid speculation since January. The Dutch may also have wished to see whether a third party would make a rival offer.

Akzo said yesterday that it would comply with the Takoever Panel’s edict but it gave no indication whether it would raise its offer. Akzo must make a firm offer or walk away by August 9. If it chooses the latter, it cannot make a new offer for ICI for a period of six months. A decision to walk away may be made conditional on a third party not bidding for ICI or a recommendation by the ICI board to accept an Akzo bid.

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