Clorox Rejects Icahn Bid

Billionaire Carl Icahn, an activist investor who plans to acquire Clorox Co. (NYSE:CLX), his biggest takeover till date, the acquisition will not be possible unless he makes a payment of an additional half a billion dollars.

The board of Clorox Co. has rejected Carl Icahn’s $ 80 per share offer earlier this week saying that it is inadequate, even though the bid valued the company at 11.6 times earnings before taxes, interests, depreciation and amortization. According to the data collected by numerous analysts, in the past 5 years, the takeovers of household and cosmetic products manufacturers at prices greater than $ 1 billion were struck at a median of 12.2 times the Earnings before interest, taxes, depreciation and amortization (EBITDA) which implies that Clorox Co.’s equity can fetch around $ 85 per share. According to this data, the deal will cost an extra $ 600 million to Carl Icahn excluding expenses and other fees.

The seventy five year old investor, Carl Icahn is yet to put together a plan to increase the returns at a company which already has a highly profitable business, making more profits through sales than any other household products manufacturer in the United States. Jefferies & Co. has already said that it is highly confident that it can assist Icahn in raising around $ 7.8 billion in debt and the total nears almost seventy five percent of the entire amount that it has arranged in the high yield market in United States last year making this the biggest financing agreement.

The spokesperson for Clorox Co. based in Oakland California, Kathryn Caulfield declined to comment about the matter when questioned. The spokesperson for Icahn, Susan Gordon said that the investor was unavailable for comment.

The shares of Clorox Co. fell by 0.5 percent or 39 cents to around $ 72.30 in New York earlier today.  Icahn is one of the largest investors in Clorox owning about 9.8 percent stake. He had raised his offer to $ 80 per share few days back after his earlier bid of $ 76.50 was rejected by the company and Clorox decided to adopt the poison pill strategy to discourage the takeover. The current bid values equity not owned by Carl Icahn at $ 9.7 billion in addition to $ 2.3 billion net debt . An 18 percent premium to twenty day trading average earlier to the initial offer is represented by the raised bid.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.