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TheStreet Open House

Icahn Offers to Buy Clorox for 12% Premium

Stocks in this article: CLX

NEW YORK ( TheStreet) -- Carl Icahn has set his sights on a buyout of Clorox (CLX), according to a regulatory filing early Friday that indicates he's proposed to purchase the company for $76.50 per share, or roughly $12.6 billion.

According to the disclosure filed with the Securities and Exchange Commission, Ichan sent a letter to Clorox CEO and Chairman Donald Knauss making the bid, which values Clorox shares at a 12% premium to Thursday's closing price of $68.43. Entities controlled by Icahn own roughly 9.4% of Clorox's outstanding common stock, making him the company's largest shareholder.



Icahn notes in the letter that the $76.50 consideration represents a premium of 21% since his initial investment in late December. He expects said roughly $7.8 billion in financing has already been secured for the deal through Jefferies & Co., and that the remainder of the consideration would consist of his equity contribution and cash on hand.

Icahn noted that the proposal includes a hefty termination fee of $100 million that he will pay if Clorox agrees to the deal and then Icahn subsequently doesn't close, and encouraged the company to shop around for a better offer as well, which of course has the potential to greatly increase the value of his investment.

"We are in a unique position as your largest shareholder in that we are wearing two hats - one as a shareholder and another as a buyer," Icahn says in the letter. "Thus, while we stand ready and able to buy Clorox, we encourage you to hold an open and friendly "go-shop" sale process where all the synergistic buyers are offered due diligence and invited to bid. If the company does so, we are confident the process will result in numerous superior bids for this company."

As of Thursday's close, Clorox shares were up 11% so far in 2011. The company's brands include its namesake bleach and cleaning products, Armor All and STP automotive care products, Kingsford Charcoal, and Burt's Bees personal care products, among others. The company is expected to report revenue of more than $5 billion this year.

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