Icahn Bids on Clorox - Analyst Blog
July 18 2011 - 10:15AM
Zacks
Clorox Corporation (CLX) disclosed that it has
received a conditional acquisition offer from activist investor,
Icahn Enterprises L.P. The acquisition, which is subject to due
diligence, financing and other conditions, is worth $76.50 per
share. Clorox mentioned that it will evaluate the proposal shortly
after discussing with its financial and legal advisers.
Icahn, which acquired a 9.5% stake in Clorox, in February,
mentioned that the acquisition price represents a premium of 12% on
the closing price of the shares on Thursday while a 15.5% premium
to the price which prevailed in February.
Icahn's bid of $76.50 per share represents a value of $10.2
billion for Clorox based on roughly 133.3 million shares
outstanding as of March 31, 2011. Exclusive of the 12.5 million
shares, which Icahn already holds, he would give approximately
$9.24 billion for the rest of Clorox's shares and would also take
$2.125 billion in long-term debt.
The Goldman Sachs Group, Inc. (GS) and
JPMorgan Chase & Co. (JPM) are acting as
financial advisers for the deal while Wachtell, Lipton, Rosen &
Katz are the legal advisers.
Clorox is one of the world's leading manufacturers of consumer
products. The company possesses a strong portfolio of brands,
including Clorox, Glad, Brita, Armor All, Burt’s Bees, STP and
Kingsford, thereby offering it a competitive edge and bolstering
its well-established position in the market.
Moreover, Clorox has established well-defined financial goals to
measure its progress. These goals include 3% to 5% annual sales
growth before acquisitions, and 75 to 100 basis points of annual
improvement in operating margin.
On the flip side, the company faces intense competition from
other well-established consumer product companies, both in the U.S.
and in international markets, such as Colgate-Palmolive
Co. (CL) and Procter & Gamble Co.
(PG). Most of the company's products compete with other widely
advertised brands within each product category and "private label"
brands and "generic" non-branded products of grocery chains and
wholesale cooperatives in certain categories, which typically are
sold at lower prices.
We are maintaining a long-term Neutral recommendation on Clorox
Corporation. Moreover, the company has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
COLGATE PALMOLI (CL): Free Stock Analysis Report
CLOROX CO (CLX): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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