NEW YORK (TheStreet) -- Shares of The Clorox Co. (CLX) are higher by 7.11% to $97.01 in late morning trading on Monday, following the company's announcement it will discontinue operations at its affiliate, Corporacion Clorox de Venezuela S.A, as it feels the business is "no longer viable."
"For nearly three years, Clorox Venezuela was required to sell more than two-thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced cumulative triple-digit inflation resulting in massive increases in Clorox Venezuela's input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, causing ongoing operating losses" the company said.
Clorox said it met with government authorities in Venezuela a number of times in order to help them understand the "rapidly declining state of the business," including the need for price increases.
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Clorox found the price increases approved by the government to be insufficient and would have resulted in Clorox Venezuela continuing to operate at a loss.
Additionally, a few months before the company's CEO switch, Clorox turned down a takeover offer from a rival packaged-goods company, the New York Post reported.
The competing company valued Clorox at almost a 20% premium to its trading price, sources told the Post.