ICI shares gain on Reliance bid buzz

Shares of Imperial Chemical Industries Plc (ICI), the UK's largest specialty chemical maker, rose for a second day amid speculation that Reliance Industries Ltd, India's largest company, may make a takeover bid.

ICI stock advanced 21.5 pence, or 4 percent, to 561.25 pence and was trading at 549 pence as of 11:39 a.m. in London for a market value of 6.56 billion pounds ($13 billion). The U.K. company added 7.1 percent yesterday, the most in four months, on speculation that Dow Chemical Co, the largest US chemical maker, might make an approach.

"Reliance has come to the fore this morning as a possible bidder after Dow was mentioned yesterday,'' said Peter Cartwright, an analyst at Evolution Securities in London with a "neutral'' rating on ICI. "We can't ignore these rumours. Reliance wants to expand its business with a new platform for growth and it knows ICI India well. They have the money and this will allow them to branch out into a new market which is already consolidated.''

ICI may be targeted for takeover after the London-based company cut 2,300 jobs and sold units to sharpen its focus on paints and coatings, with Akzo Nobel NV, the No 1 paint maker, previously touted as a bidder. Reliance has also been linked with an offer for Dow. It's no longer considering an approach for the US company after the price was driven too high by private-equity interest, a report said on March 23, citing nobody.

Shares of ICI have advanced 41 per cent in the past six months. Stock of Mumbai-based Reliance rose as much as 2 per cent to Rs 1,368 rupees today before trading at Rs 1,363.15 for a market value of about $44 billion.