The consumer-products maker agreed to buy Burt's Bee's, a maker of natural personal-care and beauty products, for $925 million cash. For Clorox -- whose products include its namesake cleaner, Glad trash bags and Hidden Valley salad dressing -- the deal marks its first foray into the personal-care space.
Clorox said the purchase aligns with its strategy of seeking growth from consumer "megatrends" in health and wellness, sustainability and convenience.
Burt's Bees makes more than 150 "earth-friendly" personal care products, with items like Beeswax Lip Balm and Orange Essence Facial Cleanser. It's estimated to have about $170 million in customer sales in 2007.
"Burt's Bees is a compelling strategic fit for us, and we believe we can expand on its strong trends over time to build even greater value," said Beth Springer, Clorox's executive vice president of strategy and growth. "Burt's Bees has a highly effective strategy and plan, strong trade practices and organizational capabilities, and a robust culture and
esprit de corps
that we want to leverage and protect."
Clorox expects the deal to cut its earnings by 10 cents to 15 cents a share this fiscal year, and be slightly accretive in fiscal 2009.
Clorox also reported that its fiscal first-quarter profit was roughly flat with a year ago. Earnings for the period ended Sept. 30 slipped to $111 million from $112 million a year earlier. Earnings per share rose to 76 cents from 73 cents due to fewer shares outstanding.
Sales climbed to $1.24 billion from $1.16 billion a year earlier.
The results easily beat analysts' average estimates for a profit of 61 cents a share and sales of $1.21 billion, according to Thomson Financial.
Clorox said, however, that it expects gross margins this year to be hit buy higher commodity costs, particularly in the current quarter. To offset the rise, the company plans to lift prices on its Kingsford charcoal prices, and it recently boosted prices on its Hidden Valley salad dressing as well.
For the year, the company now sees earnings of $3.33 to $3.50 a share. While that's up modestly from its prior view of $3.27 to $3.46, Clorox said most of the boost is attributable to a recent accelerated share buyback plan.
Analysts project earnings of $3.31 a share for the fiscal year ending in June.