Akzo Nobel was close to clinching a deal to acquire ICI last night after raising its offer for the second time in less than a week to secure the British maker of Dulux paints.

It is understood that Akzo has agreed to pay between 660p and 670p a share, although the talks were ongoing last night and sources said that the deal could yet fall apart.

A deal at 670p would value ICI at more than £8 billion.

However, an offer at any premium to 650p puts Akzo Nobel at risk of a revolt among its own investors, who are known to have expressed disquiet about the potential cost of a takeover.

On July 30, the British company said that it had turned down a second indicative offer of 650p, a 50p increase on the price mooted in Akzo’s initial approach in early June.

The market value of ICI has soared over the past year from just under 400p a share. It rose sharply in late November when it announced that it was selling Quest, its fragrance unit, to Givaudan.

That deal left ICI virtually debt-free and a tempting target. Its share price soared again in January when The Times revealed that Akzo Nobel was keen to expand its coatings business with a decorative paints brand and that it had set its heart on Dulux.

Akzo then sold its Organon drugs unit for $14.4 billion, giving the Dutch chemicals and coatings giant a cash pile large enough to comfortably swallow ICI.

However, the ICI board has continued to hold out for more. Late last month, the Dutch company secured the assistance of Henkel, the German consumer products group that has agreed to purchase parts of ICI’s National Starch, helping to defray the huge cost of a cash bid for ICI, worth £7.8 billion at Akzo’s last offer.

Sources said yesterday that the additional cost of the newly raised offer would also come from Henkel, as Akzo seeks to defray any rebellion from its shareholder ranks.

Analysts reckon that the onward sale of the adhesives and electronic materials businesses could generate about £2 billion.

Still, the escalating price has caused acute anxiety among some Akzo investors, who question whether Akzo can still generate more value from Dulux at these levels. At 628p, the ICI share price still lags the indicative Akzo offer, suggesting that there is little prospect of a competing offer for ICI at these levels.

However, Standard Life Investments, one of ICI’s leading shareholders, has supported the company’s rejection of the bid. “We are comfortable with ICI’s decision to turn down the bid from Akzo Nobel,” it said this week.

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