Icahn's Low Bid for Clorox Is Self-Serving

Compared with some of Icahn's other letters to companies and shareholders, Friday's note to Clorox is positively gentle. Icahn even offers to pay Clorox $100 million if the board accepts his offer and he fails to close "for any reason whatsoever."

"Normally when you hear Carl Icahn and shareholder letter, you figure it's going to be nasty," Suskind says. "If he really wants something, he crushes management and the firm itself. He usually kicks them pretty hard. This memo was mild and merely puts them in play."

For example, in a letter to Motorola (MMI) shareholders in 2007, Icahn highlighted "serious problems in the mobile devices business," adding that "Motorola is a troubled company" and was "in need of a fresh perspective." He also called out the company's board as "passive and reactive."

More recently, Icahn wrote that "it is time for a change on the board of directors of Mentor Graphics (MENT)," in an April 21 letter to shareholders. Among the critical points of that letter, Icahn argues that "Mentor's Board has persistently diluted its shareholders while its closest peers have not."

In terms of timing, Icahn couldn't have asked for a better day to make an impact with his Clorox bid. By picking a quiet summer Friday where the only other big news was Citigroup's (C) quarterly results and some weak manufacturing data, Icahn did a great job forcing the hands of potential buyers.

"It puts it in the headlines because he timed it that way. It's a slow summer Friday," Suskind says. "Over the weekend, there will lots of talk about and, all of a sudden, it forces someone to make a move. This will get the suitors out there because they don't want to be late to the party."

But in the end, Icahn will be the big winner when it comes to Clorox. The stock was last up nearly 8% to $73.83 after touching a new 52-week high of $75.10 earlier in the session. His bid may be self-serving, but that's the way the market reacts when a billionaire investor throws his money around.

"This is philosophical, but if I own a couple hundred shares I could write a letter to other shareholders saying the stock is worth $100. And yet, it's not the same effect as Carl Icahn," Suskind says. "But this is what makes markets. No one is forcing anyone to buy or sell this stock."

"I think we're still in a free-market economy," Suskind adds with a laugh.

-- Written by Robert Holmes in Boston.



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