Grow's directors have recommended ICI's tender offer, pitched at $18.10 a share. They also agreed to the sale by Corimon, a Venezualan corporation, of its 25 per cent stake in Grow for $17.50 a share.
John Danzeisen, the chief executive of ICI's North American paint operation, said: "ICI views the merger as an extremely good fit. We believe Grow's valued paint brands and distribution network will complement ours."
ICI became a big player in the $18bn North American paint market in 1986 with the acquisition of Glidden Paints for $500m.
Last year it expanded the operation, buying California-based Decratrend Paints, bringing the division's sales to around $1bn a year.
The acquisition will add 150 company-owned outlets to Gliddens existing 450 in geographically complementary locations. Grow had sales of $402m in the year to last June and profits of $14m.
Following the acquisition of a Los Angeles-based coatings and chemicals business, sales are expected to exceed $500m this year.
Four-fifths of sales come from architectural paints supplied to professional painters as well as big industrial and government accounts. The company also sells heavy-duty coatings for tankers and fishing boats, petrochemical plants and oil rigs.
There is an automotive division providing adhesives, sealants and speciality coatings, a household and laundry products arm and an aerosol spray paint maker.
The Grow acquisition is the first since ICI announced a surge in first- quarter profits last week from £93m to £221m. Earnings per share almost tripled from 6.1p to 17.5p.
Sir Denys Henderson, in his last announcement before retirement, said cost-cutting and productivity improvements had driven the rise in profits, more than offsetting the impact of raw material price increases.
Profits from the paints division at £14m were £3m below those for 1994 despite higher sales, volumes and prices as last year's highly competitive market continued into the first quarter.
The division, which has undergone several years of intensive change, has operations in North America, Europe and Asia Pacific, where sales growth is expected to be strongest.
Factories have been extended in Thailand, Taiwan and Australia and new sites added in Malaysia and China.
China is a fast-growing market for paint and last year 100 display centres were opened in Chinese towns and cities.
ICI's shares closed 1p lower at 754p.Reuse content