Clorox Co., the maker of household- cleaning products, agreed to sell its STP and Armor All auto- care brands to private-equity firm Avista Capital Partners for about $780 million in cash.
The deal for the businesses, which had global sales of about $300 million in the year ended June 30, probably will close by the end of the year, Clorox said today in a statement. Clorox plans to use the proceeds to buy back stock.
Clorox Chief Executive Officer Don Knauss said in May that the bleach maker would explore options for the auto-care brands because the businesses have languished for years and aren’t a good match. Earnings lost from the sale of the unit will trim profit by 20 cents to 25 cents a share this year, Clorox said.
“It’s a reasonable price,” said Ali Dibadj, an analyst at Sanford C. Bernstein & Co. in New York who has an “underperform” rating on the shares. “It was not a fast- growing business, but they are very good brands with very good margins.”
Five-year-old Avista, made up of the former DLJ Merchant Banking Partners, invests primarily in health-care, energy and media companies. Kirkland & Ellis LLP served as Avista’s legal adviser.
The sale will be the sixth divestiture for Clorox in the past decade, with the last one completed in 2003, according to data compiled by Bloomberg. Clorox, based in Oakland, California, fell 89 cents to $66.72 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 9.4 percent this year.
The company earned $4.24 a share in the year ended June 30. It’s spent almost $3.6 billion on share repurchases in the past six years, including a $2.3 billion buyback in 2005, according to Bloomberg data.
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