Icahn Boosts Clorox Offer to $10.7 Billion After Rejection ABC Recruitment

Icahn Boosts Clorox Offer to $10.7 Billion After Rejection

Jul 18, 2011 Career News

Carl Icahn raised his offer for Clorox Co. to $80 a share, valuing the maker of the namesake bleach at about $10.7 billion, after his earlier bid was rejected.

Icahn Enterprises LP and affiliates will put $5.2 billion, including their Clorox shares, in escrow to demonstrate the credibility of the offer, Icahn said today in a filing. Clorox rejected his earlier bid this week, saying it undervalued the company and financing wasn’t certain. Clorox said today in a statement it will review the higher proposal “in due course.”

Icahn, Clorox’s largest investor with a 9.4 percent stake, told Bloomberg Television today that he may break up the company if his bid is successful. Icahn offered to acquire Clorox last week for about $10.2 billion, or $76.50 a share, and urged directors to seek offers from strategic buyers including Procter & Gamble Co. and Kimberly-Clark Corp.

“If we buy it, we might split it up and possibly keep one of the divisions,” Icahn said in the interview with Bloomberg’s “Street Smart with Carol Massar and Matt Miller,” declining to specify which unit he would retain.

Clorox, based in Oakland, California, rose $1.77, or 2.4 percent, to $74.34 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 8.6 percent since July 14, the day before Icahn made his bid. The company’s products include Glad trash bags, Fresh Step cat litter, Burt’s Bees skin-care products, Kingsford charcoal and Green Works natural cleansers.

‘Reprehensible’ Plan

Icahn boosted his offer today and set money aside in an effort to end questions about whether he was serious and had proper financing, he said. Clorox is “cheap” at $80 and a good deal for strategic buyers, Icahn added. Clorox directors’ decision to institute a shareholder rights plan following his initial offer was “reprehensible,” he said.

“Icahn’s got a history of being a bulldog and staying in there,” Jack Russo, an analyst at Edward Jones & Co. in St. Louis, said today in a telephone interview. Russo recommends holding Clorox shares.

Icahn included in his first proposal a letter from Jefferies & Co. that stated the investment bank was “highly confident” it could help him raise $7.8 billion in debt financing to partially fund the takeover. He said today that there is no “legitimate question” that those funds could be raised.

Rights Plan

Clorox adopted a shareholder rights plan that would allow current investors to purchase additional shares if an entity acquired more than 10 percent of the company in a transaction not approved by the board.

“By turning down our offer and the possibility of higher ones, you are asking shareholders to take meaningful risk without giving them the opportunity to decide which option they would prefer,” Icahn said in a letter to Clorox included in today’s filing.

In his previous filing July 15, Icahn invited Clorox to seek competing bids from Unilever NV, Colgate-Palmolive Co., Reckitt Benckiser Group Plc and Henkel AG, as well.

“An acquisition of Clorox would give Unilever a leading brand portfolio in cleaning and household products on the U.S. market and the potential for international expansion,” Richard Withagen, an analyst at SNS Securities in Amsterdam, said in a note today.

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