A week of intense meetings will decide the fate of ICI, the Dulux paints company, which yesterday dangled the carrot of further talks to Akzo Nobel, indicating that it was not wholly rejecting the attentions of its Dutch suitor, which has raised its takeover offer to £7.8 billion.

The two sides are thought to be about “20p apart” in terms of the indicative share price at which ICI might open its books and allow Akzo to review financial information.

ICI said yesterday that it had turned down a second indicative proposal from Akzo to acquire ICI for 650p per share, a 50p advance on the first approach in early June.

ICI shares rose 41p to 618p as the company confirmed the second Akzo proposal, but they remained shy of the indicative offer.

The British group again refused to provide the Dutch with access to internal financial information, a condition of Akzo’s indicative offer, but its rebuttal was framed in conciliatory language which hinted that an agreement was possible.

In its formal statement, ICI said that it had met Akzo “to advise that the proposal was rejected and to explore whether it could be increased”. No improved offer was forthcoming at the meeting, but according to ICI “discussions are continuing”.

Akzo must make a firm offer for ICI by August 9, after a Takeover Panel “put up or shut up” ruling, or abandon its pursuit for six months. Akzo’s increased offer was made possible with the assistance of Henkel, the German consumer products company, which has agreed to acquire ICI’s adhesives and electronic materials business if Akzo is successful in taking over the group.

Analysts estimated that Akzo could generate more than £2 billion by selling on parts of ICI to Henkel, defraying the cost of the higher indicative offer.

Akzo indicated yesterday that its own shareholders would benefit from the Henkel deal. In a statement confirming the arrangements with Henkel, the Dutch company said: “It would also allow Akzo Nobel to return further cash to its shareholders.”

Certain Akzo shareholders have expressed disquiet about the potential cost of the company’s ambition to expand its coatings business with the addition of the Dulux brand.

Some analysts yesterday were describing the new Akzo proposal as “a significant premium”. One firm, Collins Stewart, suggested that ICI’s management “owe us an explanation” for its rejection of the offer.

However, ICI’s advisers suggest that the Dulux brand is a unique business and some of its shareholders, notably Standard Life, have suggested that only a £7-per-share offer would be acceptable.

With the world’s largest coatings business and leading positions in industrial paints, Akzo is anxious to complete its portfolio with a strong consumer brand, a key requirement in its efforts to develop a robust paints business in China. The adhesives and electronic materials businesses form part of National Starch, the second leg of ICI, originally acquired from Unilever. Henkel, which has a portfolio of consumer businesses, owns the Loctite adhesives brand.

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