In a surprise move the Netherlands-based Akzo Nobel has announced the sale of its drugs unit Organon BioSciences to Schering-Plough for €11 billion ($14.5 billion) in an all-cash deal, scrapping earlier plans to get it listed. The deal is expected to close in the second half of the year.

Akzo Nobel will also return €1.3 billion from the sale proceeds to its shareholders. Analysts believe the transaction was a good one for both companies and a better option than the earlier plan to list Organon on the stock exchange.

Analysts had earlier valued birth-control pills maker Organon at €9 billion and say Schering may have been willing to pay a premium for the acquisition, which allowed it to grow through acquisitions.

The share prices of Akzo Nobel and Schering-Plough rose by 15 per cent and nearly 6 per cent respectively. The news of the transaction also lifted the shares of UK chemical firm ICIC as investors have been speculating that Akzo Nobel would use the proceeds to acquire ICI, a combination that analysts say would make a good fit.

Akzo Nobel is a healthcare products maker and the world's largest maker of paints and coatings, which had revenues of €13 billion in 2005. Morgan Stanley advised Akzo Nobel. Schering-Plough did not disclose its advisers.