Oct. 31 (Bloomberg) -- Clorox Co. reported first-quarter profit that fell less than analysts' estimates and agreed to buy Burt's Bees, the maker of natural lip balm and hand cream, for $925 million, its biggest acquisition in nine years.

The bleach maker's shares rose the most in two months.

Closely held Burt's Bees, based in North Carolina, uses bee's wax, flowers and other natural ingredients in its soap, moisturizers and shampoo, helping Clorox profit from rising consumer demand for environmentally friendly products.

``The Clorox name doesn't tend to make one think of nature- friendly products,'' said Ali Dibadj, a New York-based analyst with Sanford C. Bernstein & Co. ``This acquisition can help.''

Revenue in the three months through Sept. 30 rose 6.7 percent to $1.24 billion, the company said today in a statement. Profit excluding some costs beat estimates by 17 cents a share on sales of Clorox disinfecting wipes and higher prices on bleach and Glad-brand trash bags.

``Clorox has great brand equity,'' said Bob Goldsborough, who helps manage assets of $14.3 billion, including 2.4 million Clorox shares, at Ariel Capital Management LLC in Chicago. ``Consumers have shown again and again they are willing to pay for the Clorox name.''

Shares Gain

The company, which also makes Brita water-purification products, Kingsford charcoal and Fresh Step kitty litter, rose $1.57, or 2.6 percent, to $62.57 as of 4:18 p.m. in New York Stock Exchange trading for the biggest advance since August. The shares dropped 4.9 percent this year before today.

Clorox said in May it would make acquisitions in the next three years, particularly of health and convenience products.

``We see lots of growth potential in Burt's Bees,'' Beth Springer, Clorox's head of strategy, said on a conference call today. Clorox will expand distribution of Burt's Bees products in mass merchandisers such as Target Corp., the second-largest U.S. discount chain.

About 40 percent of Burt's Bees sales come from lip-care products, while 30 percent are from baby and outdoor products. The rest is from personal cleaning, its fastest growing line. The Burt's Bees purchase is the largest since acquiring First Brands in October 1998 for $1.96 billion.

Companies have increasingly turned their focus on green, or environmentally friendly, products. Colgate-Palmolive Co., the world's largest toothpaste maker, bought Tom's of Maine Inc. in March 2006 for about $100 million. Tom's uses only natural ingredients, such as castor beans and olive oil, in its toothpastes, soaps and shaving cream.

Ice Cream Purchase

Dutch Foodmaker Unilever NV bought Ben & Jerry's Homemade Inc., a maker of ice cream from all-natural products, in 2000.

Clorox will fund the purchase with cash and short-term borrowings. The acquisition will close by the end of the year, the company said.

Standard & Poor's revised its outlook on Clorox to ``negative'' from ``stable'' because of the extra debt associated with the acquisition.

First-quarter net income fell to $111 million, or 76 cents a share, from $112 million, or 73 cents, a year earlier, Clorox said today in a statement. The company blamed rising costs for soybeans and corn used in Hidden Valley salad dressings and for resins used in Glad trash bags.

Net income included pretax expenses of $27 million, or 12 cents a share. About $25 million was for restructuring and writing down the value of assets, while $2 million was for cost of products sold, the company said.

Excluding those expenses, profit was 88 cents a share. Twelve analysts expected 71 cents, on average, in a Bloomberg survey.

The company raised its full-year profit forecast to $3.33 to $3.50 a share, from $3.27 to $3.46, to reflect share buybacks.

Clorox stopped giving quarterly forecasts because it causes analysts to focus too much on short-term results, the bleach maker said in May.

To contact the reporter on this story: Carol Wolf in Cleveland at cwolf@bloomberg.net

Last Updated: October 31, 2007 16:30 EDT