LONDON (Bloomberg) Imperial Chemical Industries Plc shares may advance after newspapers reported Dutch rival Akzo Nobel NV will increase its offer for the UK's largest maker of specialty chemicals.

Akzo may raise its $14.6 billion offer to as much as 660 pence ($13.36) a share, The Observer reported yesterday, without saying where it got the information. Akzo Nobel spokesman Tim van der Zanden declined to comment on the report. ICI spokeswoman Regina Kilfoyle didn't immediately return calls seeking comment.

Akzo Nobel, the world's biggest maker of paints and coatings, made an initial approach to ICI in June valued at 600 pence a share. ICI spurned the offer as too low and U.K. regulators gave Akzo until August 9 to make a formal bid.

ICI may reject an offer from Akzo Nobel NV that's worth between 640 pence and 650 pence, the Sunday Telegraph reported, without saying where it got the information. ICI shares closed at 577 pence a share on July 27. Akzo Nobel's offer falls short of the price of 700 pence a share that shareholders such as Standard Life Plc had hoped for, the Observer said.

A price of 660 pence "sounds a bit meager," said Gert-Jan Geels, who helps manage about $680 million at Eureffect in Amsterdam. "I can imagine that they would raise it one more time. They do have the money. It's no problem at all for Akzo to pay these prices." A higher offer may delay when the acquisition will add to earnings, Geels said.

ICI would add $9.6 billion to Akzo's $18.4 billion in annual sales, and a merger would generate as much as $362 million in savings, Collins Stewart analyst James Knight has said. Akzo could combine the companies' coatings units and achieve greater bargaining power with suppliers, analysts said.

Akzo's sale of drugs unit Organon for $14.4 billion gives it enough cash to comfortably purchase any rival, Merrill Lynch & Co analyst Fraser Hill has said. Akzo agreed to sell the business in March to Schering-Plough Corp at the last minute after planning an initial share sale of the unit.

A bid of as much as 660 pence is "a reasonable price," said Tom Muller, an analyst at Theodoor Gilissen in Amsterdam. He recommends investors "buy" Akzo shares. "If this acquisition doesn't go through, Akzo will itself become a target," he said.

Shares of ICI have advanced 28 percent this year, driven by takeover speculation. That gives the company a market value of £6.9 billion ($9.4 billion). Akzo's stock has gained 31 percent for a value of 17.4 billion euros ($23.7 billion). Akzo, whose primers and paints are used on Airbus SAS's A380 airliner, makes Crown and Sikkens paints as well as finishes for automobiles and chemicals for paper. The company reported a 13 percent gain in pretax second-quarter profit on July 24 as increased demand for chemicals pushed up prices.

ICI was formed in 1926 when four chemical companies merged to create a British industry bellwether capable of taking on the rest of the world's chemical producers.