Updates with share move in 1st bullet. Adds analyst comments in bullets 2 and 6

** Shares in AkzoNobel AKZO.AS edge up 1.4%, paring earlier gains of about 4%, after the Dutch paint maker received a takeover offer from Nippon Paint 4612.T for its decorative paints business, valuing it at €7.5 billion ($8.6 billion)

** However, AkzoNobel says the offer significantly undervalues the business and continues to unanimously recommend a planned merger with coatings maker Axalta AXTA.N

** Jefferies says the offer "crystallises significant value for Deco Paints", while Bernstein says the offer undervalues the unit relative to historical precedents

** Nippon Paint's new proposal comes after it withdrew the previous one, extended jointly with Sherwin-Williams SHW.N, to buy the whole company for €12.5 billion

** "We cannot be blind for the fairly disappointing track record of Akzo in the past few years," KBC Securities says, pointing to earnings volatility and low structural growth -- it reiterates "hold" rating, expecting the Axalta merger execution to "take quite some time"

($1 = 0.8771 euros)