This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Icahn's Bid for Clorox Gets Personal

Stocks in this article: CLX PG UL MENT CL KMB

BOSTON ( TheStreet) -- Clorox (CLX) has awakened an angry corporate raider after questioning the credibility of Carl Icahn's buyout offer. Now it's personal.

Clorox Chairman and CEO Donald Knauss in a letter Monday said the company's board of directors was unanimous in agreeing that Icahn's bid to acquire Clorox at $76.50 per share "substantially undervalues the company and is neither credible nor adequate." Clorox also adopted a shareholder rights plan, which amounts to a "poison pill" that protects against hostile buyers through share dilution.

Carl Icahn

Icahn shot back at Knauss and Clorox in a letter Wednesday, calling it "disingenuous" and saying the board's concerns are "misguided." Icahn, who originally proposed a buyout of the company at $76.50 per share in cash, is now offering $80 per share for Clorox. Icahn's original proposal was widely viewed as merely a way to put Clorox in play. If Icahn was truly only trying to ignite a bidding war, he's only bidding against himself thus far, and he doesn't seem very happy about it.

"For Don Knauss and the rest of the board to claim our proposal remains inadequate and at the same time tout your record for shareholders seems a bit absurd," Icahn wrote in Wednesday's letter. Icahn said his firm and affiliates will escrow $5.2 billion, inclusive of his ownership of 12.5 million shares of Clorox, adding that there is no legitimate concern that he could raise the remaining $7.8 billion in financing needed to complete his proposed deal.

By putting his money where his mouth is, the billionaire investor has completely surprised analysts who follow Clorox. Bank of America/Merrill Lynch research analyst Christopher Ferrera called a sweeter Icahn bid a "less likely possibility" on Monday, noting that Clorox's board is not staggered. A staggered board helps protect public companies against hostile bids.

Deutsche Bank research analyst Bill Schmitz on Monday called the likelihood of a higher bid from Icahn, "especially one high enough to satisfy Clorox's board, very remote." UBS analyst Nik Modi said he continues to believe "a competitive bid from a 'strategic buyer' is unlikely."

If Icahn was determined to stir up bidders for Clorox, then why would he return with a sweetened offer so quickly?

"It's hard to see what his objective is," says Wayne Stevens, managing director and CIO at Dearborn Partners. The Chicago-based firm has $2.3 billion in assets under management and owns shares of Clorox.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs