Adds analyst comments from paragraph 9, updates shares.

By Dimitri Rhodes

May 27 (Reuters) - Dulux paint maker AkzoNobel AKZO.AS struck down a €12.5 billion ($14.6 billion) cash takeover offer from rivals Nippon Paint 4612.T and Sherwin-Williams SHW.N on Wednesday, sending its shares 20% higher.

The offer price of €73 per share represented a premium of 39% to AkzoNobel's last closing price of €52.52 per share. The shares jumped to €63 by 1241 GMT, firmly on track for their best trading day since at least October 2008.

AkzoNobel said the non-binding proposal undervalued its business, lacked deal certainty regarding regulatory clearances and would have split the company between the two suitors.

The Dutch company's board continues to recommend the planned merger with U.S. coatings maker Axalta AXTA.N.

The planned merger, which shareholders are set to vote on in early July, would create a combined coatings company with an enterprise value of $25 billion, led by AkzoNobel CEO Greg Poux-Guillaume. The deal is expected to close in late 2026 or early 2027.

The two parties have said the merged entity would deliver $600 million in annual cost savings, most of them within the first three years.

DEAL OR NO DEAL?

Under the rejected proposal, Nippon Paint would have acquired AkzoNobel and retained its decorative paints and industrial coatings businesses, while selling its automotive, marine and powder coatings divisions to Sherwin-Williams.

"Neither proposal qualified as a 'potentially superior' offer, compared to the Axalta merger," an AkzoNobel spokesperson said.

AkzoNobel's comments seem to suggest the proposal was rejected due to its price, brokerage MKI said in a note to investors, while noting the consortium could have deliberately timed its approach for when the share price was low.

"The hint here is probably that the consortium has more up its sleeve," MKI analysts wrote.

AkzoNobel had rejected a similar offer by Pittsburgh-based PPG Industries PPG.N in 2017.

A hostile approach would be complicated by AkzoNobel's stichting, a Dutch legal entity designed as an anti-takeover mechanism, which holds 48 priority shares worth 400 votes each.

AkzoNobel's stichting is firmly committed to the Axalta merger, so if shareholders were to terminate that deal, the stichting could block the takeover bid and leave the company with no deal at all, MKI explained.

Therefore, Nippon Paint and Sherwin-Williams would likely need to offer a very high price and deep commitments to sway the company's board to abandon the existing plan, the analysts said.

($1 = 0.8593 euros)