UK''s Takeover Panel has given the Dutch chemicals company Akzo Nobel until 9 August to table a takeover offer for its UK rival ICI Plc, for which it had made a $14.2-billion takeover proposal on 4 June that ICI had rejected on the grounds that it undervalued the company.

Akzo, the world''s largest manufacturer of paints and coatings, had offered 600 pence a share for ICI (See: ICI rejects $14.2 billion cash bid by Akzo Nobel)

Though there has been no formal contact between Akzo and ICI ever since the rejection, the UK- financial daily Financial Times reported that some Akzo managers had been sounding out ICI shareholders about a further offer.

ICI''s pension fund trustees are set to play a crucial role in any deal and will insist that whoever takes over ICI provides enough financial support to the pension scheme to keep its promises to its 71,800 members.

ICI has seen its share price jump 40 per cent in the past six months on persistent speculation that ICI was a takeover target.

Akzo Nobel, which in a surprise move sold Organon BioSciences, its pharmaceuticals division to Schering-Plough for $14.5 billion in cash in March (See: Akzo Nobel sells Organon BioSciences to Schering-Plough for €11 billion) has enough resources to fund the acquisition.

Analysts say the strategic logic behind the deal is compelling with significant opportunities for synergy in purchasing, distribution and corporate overheads. Moreover, ICI paints would consolidate Akzo''s position in fast growing markets - Asia accounts for 15 per cent of ICI paint sales and Latin America for 8 per cent.

While ICI is strong in Europe and Asia, analysts also caution saying that Akzo would be acquiring "a second-rate business" in the US.

One potential stumbling block for Akzo is its ownership of the UK-based paint manufacturer, Crown, which has 14 per cent of the UK paint market and the takeover of ICI, which owns Dulux that has a 40-per cent market share may raise concerns over competition.