Icahn Pulls Out of Clorox

The AP reports:

Billionaire investor Carl Icahn’s withdrawal of his slate of directors for Clorox Co.’s board likely stemmed from his inability to find a potential buyer for the consumer products company, an analyst said Monday.

“We conclude Icahn’s real learning was likely that no strategic acquirer was ready, willing and able,” John San Marco of Janney Capital Markets wrote in a client note.

In a filing with the Securities and Exchange Commission, Icahn said he still thinks selling the company — which makes salad dressing, beauty products and other goods — is the best way to maximize shareholder value but that most shareholders don’t seem to support the idea.

Icahn, known for shaking up struggling companies, had proposed to either sell Clorox or buy it himself for at least $78 per share. The company had dismissed the proposal as not credible. In August, Icahn said he wanted to install himself and 10 other directors on the company’s board.

I can’t say I’m surprised. The stock is currently at $66 per share. This was a waste of time and money for Icahn. The share price of CLX is now lower than where it was before Icahn started this crusade.

This is what I wrote two months ago when CLX was at $74:

In my opinion, these bids over-value Clorox. Wall Street currently expects the company to earn $4.06 per share this fiscal year (which ends next June). That values CLX at nearly 20 times forward earnings. That’s just too rich.

I hate watching boards shoot down offers of over-payment. I doubt an offer like this will come again soon. I’m not sure any competing bids will come along, and Icahn may be forced to pull his offer. If I were a CLX shareholder, I’d get out of the stock right now.

Posted by on September 26th, 2011 at 11:36 am


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