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Icahn's Bid for Clorox Gets Personal

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"No one yet has stepped forward or shown any interest in coming up with another bid for the company," Stevens continues. "I think Icahn is infatuated with the idea it could be taken private and the products could be marketed overseas, which is where the growth is. Clorox has a lot of potential but the company really hasn't taken advantage of those growth opportunities."

The tone of Icahn's two separate letters to Knauss and Clorox is markedly different as Icahn turns more hostile after having his credibility questioned. In the first, Icahn is cordial as he encourages Knauss to pursue synergistic buyers, arguing that Clorox could be worth $100 per share and is "simply too accretive for these potential strategic buyers to ignore."

Icahn even names some potential acquirers he has in mind, including Unilever (UL), Colgate Palmolive (CL - Get Report), Kimberly-Clark (KMB - Get Report) and Procter & Gamble (PG - Get Report).

Icahn's response to Clorox's rejection letter, though, is a return to classic corporate-raider form. With many sentences typed in caps lock, Icahn warns Knauss of a potential "costly and debilitating proxy fight."

"You claim 'to have a proven track record of delivering superior financial returns to our stockholders,' yet the evidence suggests otherwise," Icahn writes, pointing out that Clorox shares were down 3% during the time between October 2006, when Knauss became chairman and CEO, and December 2010, when Icahn took a stake in the company.

Icahn tells Knauss that he should take the $80-per-share bid to Clorox's shareholders, but to UBS analyst Nik Modi, this could become a similar battle to the one Icahn is waging against Mentor Graphics (MENT - Get Report).

"Mentor Graphics went on the defensive with a similar 'poison pill' shareholder rights plan strategy," Modi wrote in a research note on Monday. "Today, the company has not been sold nor were there any additional offers and shares closed at $11.59 (or 32% lower than the level at which Icahn offered to buy the company)."

For investors, it seems the sweetened bid from Icahn does nothing to clear up the situation. "The prospect of someone else coming in as a bidder, like Procter & Gamble, seems to have diminished a bit," Dearborn Partners' Stevens says.

--Written by Robert Holmes in Boston.

>To contact the writer of this article, click here: Robert Holmes.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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