Imperial Chemical Industries thinks it can do better than Akzo’s hefty bid. And with its shares up 37% so far this year, it may be right. After all, it’s rough going trying to buy a fast-growing company.

Imperial Chemical Industries Plc, the U.K. maker of Dulux and Glidden paints, rejected a sweetened $16 billion (7.77 billion-pound) bid from Akzo Nobel NV of the Netherlands as too low.

Akzo, the world's largest coatings company, raised its offer 8.3 percent to 650 pence a share. That's 18 percent more than ICI's close on June 15, the last trading day before Akzo disclosed an initial approach. Stock of London-based ICI climbed 7.8 percent to 622 pence.

Akzo, based in Arnhem, boosted its offer after German chemicals supplier Henkel KGaA agreed to buy the bulk of ICI's U.S.-based National Starch unit following any takeover. The remainder of ICI would add about $7 billion to Akzo's $18.4 billion in annual sales and bolster its paints operation in the U.S. and China as Akzo wrestles with PPG Industries Inc. to keep its market-leading position.

"We are comfortable with ICI's decision to turn down the bid from Akzo," said Brian Simmons, a spokesman for Standard Life Plc's investment division, which is ICI's third biggest shareholder, according to data compiled by Bloomberg.

Shares of ICI rose as much as 45 pence and traded at 622 pence as of 10:11 a.m. local time. They have advanced 37 percent this year, giving the company a market value of 7.4 billion pounds. Akzo's stock, up 0.9 percent at 61.13 euros, has gained 33 percent for a value of 17.5 billion euros ($24 billion).

ICI in June spurned Akzo's initial 600 pence bid. Regulators gave Akzo until Aug. 9 to say if it would make a formal offer.

(Continue reading this story on Bloomberg)

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