Icahn Offers $12.6B for Clorox

Date: Monday, July 18, 2011
Author: HFN Daily Report

Activist investor and former hedge fund manager Carl Icahn offered Friday to purchase Clorox for $12.6 billion.

Icahn, whose investment firm Icahn Enterprises, owns 9.4% of the Oakland, Calif. company, said in a letter to Clorox CEO Donald Knauss that his purpose is not to buy Clorox so much as to prompt the company to invite "numerous superior bids" from other investors.

The investors he suggested included Procter and Gamble, Unilever, Colgate Palmolive, Reckitt Benckiser, Kimberly Clark, and Henkel AG.

Icahn said Clorox and Clorox stockholders would receive $76.50 per share net in cash in his offer, which represents 21% increase from the closing price of Clorox stock on December 20 when Icahn first invested in the company. Clorox stock jumped up over $5 in share value to around $73.90 on Friday after news of Icahn's offer.

Icahn also said should he fail to close on the purchase by July 29 if the sale is approved by Clorox's Board of Directors, then Clorox will be paid $100 million for their "time and effort."

Clorox is the $5.2 billion manufacturer and marketer of such items as Pine-Sol cleaners and Burt's Bees natural personal care products.

Clorox, in a press release Friday, acknowledged that it had received Icahn's offer and that Clorox's board will "review the proposal in due course."

Icahn is known for the proxy fights he initiated in companies he actively has a stake over the years such as ImClone Systems. He also ran a hedge fund for several years before closing the fund late last year.