THE prospect of a takeover battle for Courtaulds loomed large in the City yesterday.
The chemicals company said it had received a preliminary approach from a third party - ''a group large enough to be credible'' - that might lead to an offer above the #1830m deal agreed with Akzo Nobel.
Courtaulds shares rose 23p to 464p, compared with the 450p cash promised by the Dutch chemicals and fibres group. Turnover was 8.67 million shares.
However, Courtaulds board, led by chairman Sir David Lees, said that as it was not possible to determine if the approach would lead to a firm bid, it had unanimously recommended the Akzo offer given its value and certainty.
Speculators pointed to Sherwin Williams or PPG Industries - the largest paints companies in the US, which have both expanded their geographic areas of operation recently - as possible bidders.
Sherwin has moved into Latin- America, while PPG has made acquisitions in Italy and Germany.
Other names in the frame have included ICI, although the British company played down speculation that it could be interested. BASF and Hoechst of Germany may look to building up their pan-European activities.
Martin Evans of broker Sutherlands has argued Courtaulds is seriously undervalued at the Akzo bid price given its key position in coatings and paints. He has advised clients to buy the stock since the Akzo deal was announced and yesterday said the new approach could substantially boost the share price.
In its letter to shareholders, Courtaulds said trading remained broadly unchanged in the last month of the financial year and that the results for the 12 months would be released on May 20.
It added that the disposal of the polymers business, which analysts suggest could be worth about #300m, was proceeding. The sale is part of the restructuring Courtaulds announced in February, which also includes the demerger of paints and coatings.
The suggestion was that these could be worth more than #1000m and would soon attract a bid from another major paint company.
Courtaulds would then be a fibres only company.
Akzo, if its offer succeeds, plans to merge its fibres operations with those of Courtaulds and then float the new company to its shareholders.
The bid closes on July 10, which is 60 days after the posting of the offer document.
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