Dutch chemicals company Akzo Nobel is set to announce on Monday it has agreed to buy British rival ICI for about 8 billion pounds ($16.18 billion), people familiar with the matter said on Sunday.

The two companies' boards are meeting on Sunday to ratify the transaction and while the timing could yet slip a formal agreement on the 670 pence-per share cash offer is expected to be signed later, the people said.

Akzo and ICI declined to comment.

Britain's Takeover Panel agreed last week to extend its deadline for Akzo to make a decision on its plans for ICI until 0900 GMT on Monday, to allow the Dutch company to complete due diligence. The deadline was originally last Thursday.

Akzo, which has teamed up with German consumer goods firm Henkel for the deal, started due diligence on the maker of Dulux paints last week after raising its bid to 670 pence per share in cash plus up to five pence per share dividend.

Akzo, the world's largest maker of industrial coatings, first proposed a bid at 600 pence a share in June, and then partnered with Henkel, the maker of Persil detergents in Germany, for its last two proposals.

Buying ICI, the maker of Dulux paints, would strengthen Akzo's leading position in the world's $85 billion a year coatings industry, giving it a market share of about 15 percent and increasing its exposure in North America and emerging markets, as well as in decorative coatings.

But Akzo, which makes Crown paints, faces potential shareholder opposition as it is offering a full price.

Under the deal, Henkel will buy ICI's adhesives and electronic materials units for 2.7 billion pounds.

ICI, Britain's biggest chemicals firm, has long been tipped as a bid target after slimming down to focus on higher-margin paints and adhesives.