The saga began at 9am when Hercules increased its bid from 155p to 175p a share, valuing Allied Colloids at more than pounds 1.2bn and effectively ending all hopes that the group would retain its independence.
It took just 12 minutes for Allied Colloids to fire back by announcing that it was in discussions with Ciba about a 182.5p bid designed to bury Hercules' hopes. The two sides had been in discussions with Allied's management all weekend in an effort to thrash out a deal.
Ciba promptly ordered, BZW, its brokers, to launch a raid on Allied's shares in an effort to seal the bid. By early afternoon it had bought 4.5 per cent of Allied in the market.
However, just as analysts were predicting that Ciba had won the day, Hercules struck again. At 4.26pm - four minutes before the market closed - the US group announced it had decided to up its offer to 195p a share, worth almost pounds 1.35bn.
Even this did not signal the end of the battle. Ciba was last night locked in talks with advisers and Allied's management, and is considering raising its offer.
The fireworks surprised the City, which before yesterday had assumed that a bid of 175p was enough to win control of Bradford-based Allied, whose shares had been priced as low as 101p in recent months.
Hercules' increased offer came just days after Allied produced its final defence document. It has been fighting for control of the British group since November and has consistently attacked its profits record and management. Few observers had expected the group to raise the stakes this high. Allied Colloids shares soared as the fight over the company mounted, and closed the day more than 16 per cent higher at 196.5p.
Keith Elliott, Hercules' chairman and chief executive, said: "Our second final offer of 195p per share in cash is more than generous and we are confident that shareholders will see it as such."
Hercules claimed its increased offer would still prove to be earnings- enhancing. Analysts believe that to achieve this it would have to slash costs, which could bring severe job losses in the UK and the US.
One analyst said: "Hercules are desperate to do a deal after losing out to Allied when they bought CPS (a US speciality chemicals business) and to ICI for other chemical businesses. Ciba will have to think long and hard about trumping what is a very good price for Allied."
Industry sources were suggesting last night that Ciba would be unlikely to go much higher that 195p if it did choose to weigh in with a higher offer. The bidders are fighting over Allied Colloid's technology, which separates particles from liquids and is used widely in water and sewage treatment as well as the textile and paper industries.
Outlook, page 21