Akzo Nobel, the giant Dutch chemicals group, yesterday entered into an agreement with arch rival PPG Industries of the United States, to avert a damaging battle for control of Courtaulds, the British paints group. Akzo, which had launched a GBP1.8 billion (about HK$22.83 billion) offer to swallow up Courtaulds and become one of the world's largest coatings companies, said it had agreed to sell Courtaulds' packaging coatings and its US architectural decorative coatings business to PPG for GBP175 million. In return, PPG would terminate discussions with DLJ Merchant Banking Partners of the US on a possible joint offer for Courtaulds in opposition to the Akzo bid. 'We are pleased to have reached this agreement with Akzo. We look forward to integrating the packaging coatings and architectural coatings businesses into our own operations,' PPG chairman and chief executive Raymond LeBoeuf said. Akzo said the businesses were not an important part of Courtaulds earnings, accounting for less than 9 per cent of total sales and less than 7 per cent of total operating profit in the current financial year. 'We look forward to completing our offer for Courtaulds and bringing to an end a period of uncertainty for Courtaulds' businesses,' Akzo's chairman Cees van Lede said. Courtaulds said it noted the deal between Akzo and PPG, and reminded shareholders that it was still recommending Akzo's offer. Akzo is keen to specialise more heavily on the lucrative industrial paints market, where Courtaulds is a leading player, and plans to combine its own fibres business with that of Courtaulds, with the aim of divesting it. Akzo's shares surged more than 2 per cent to 440 guilders (about HK$1,698) to an intraday high. The company said it was not aware of any further bidders, but analysts said others such as Britain's Imperial Chemical Industries may be tempted to bid. US paints group Sherwin-Williams is understood to have been approached by DLJ as a potential partner for a bid, but was rebuffed. DuPont is thought to be preoccupied with domestic US issues, while Austria's Lenzing - which has expressed an interest in the fibres operation - is not thought big enough to bid. Courtaulds is among the leading manufacturers of industrial marine paints an area in which Akzo is keen to develop expertise. It also wants to increase its presence in Asia, where Courtaulds has a substantial business.