Shares of Dutch chemical group AkzoNobel surged on talk of private equity takeover interest, traders said, though a deal would be improbably hard to fund, given its 11 billion euro market value.
Any leveraged buyout would be easily the biggest such deal since the credit crisis began to bite in mid-2007, and at least three times the size of 2010's biggest deal, KKR's purchase of Del Monte Foods for $5.3 billion including debt.
While bankers and private equity executives say deals of $10 to $15 billion could now be financed if they involved companies with large U.S. operations, it would still be a stretch.
A potential buyer offering a conventional premium of perhaps 30 percent to AkzoNobel's share price would have to pay roughly €14 billion ($19 billion) for its shares, and also assume its net debt.
Debt stood at 2 billion euros at the end of the third quarter, although AkzoNobel, which is the world's largest paints maker ahead of U.S.-based rivals Sherwin-Williams and PPG, has plans to use some of the $1.3 billion proceeds from the sale of its National Starch business to pay down debt.
AkzoNobel shares rose as much as 5.4% to a 32-month high on Thursday before closing up 4.9% at € 49.31. The Stoxx 600 Europe Chemicals index closed 0.4 percent higher.
The company reports fourth-quarter results next Thursday.
AkzoNobel spokesman Tim van der Zanden declined to comment on the market rumours.
"There is a vague rumour private equity is interested in buying AkzoNobel," one trader said.
Two other traders said the chance was very small that AkzoNobel could be taken over by a private equity group, citing the company's market value.
