CL Colgate Palmolive Co

Clorox Corporation (CLX) disclosed that it has again 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 now worth $80.00 per share, an increase from the prior bid price of $76.50. Clorox mentioned that it will evaluate the proposal shortly after discussing the same with its financial and legal advisers.

Icahn's bid of $80.00 per share represents a total value of $10.7 billion for Clorox based on roughly 133.3 million shares outstanding as of March 31, 2011. Icahn’s earlier bid of $76.50 per share was rejected by Clorox on grounds that the offer grossly undervalued the company.

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. It speaks for the company that it has competed effectively with peers of the likes of Colgate-Palmolive Co. (CL) and Procter & Gamble Co. (PG).

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.

 
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