Dulux paints maker ICI has rejected an improved £7.8 billion takeover proposal from rival Akzo Nobel.
Dulux said the bid from Akzo, which makes Crown Paints, said the 8 per cent increase in the offer price is not enough to warrant a sale.
ICI today said both sides were still in talks after it rejected a 650 pence a share cash proposal from Akzo but said it had not opened its books to the world's largest maker of industrial coatings.
Akzo said it had teamed up with German consumer products group Henkel over its proposed bid, but there was no certainty it would make a better offer. Henkel would take on ICI's adhesives and electronics materials business if a deal went through, Akzo said.
Acquiring ICI would give Akzo a boost in the $85 billion coatings industry, allowing it to increase worldwide market share from around 10 per cent to around 15 per cent, ahead of second-ranked Sherwin Williams's 9 per cent share.
ICI, Britain's biggest chemicals company, has long been tipped as a bid target after slimming to focus on higher-margin paints and adhesives. A failure to buy ICI would make Akzo vulnerable to takeovers, analysts said.