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Clorox Targets Health-Care Brands in Acquisition Strategy

Clorox Targets Health-Care Brands in Acquisition Strategy

Clorox Co., targeted last year by Carl Icahn, would consider acquisitions of health-care products and services to fuel what could become a $300 million business, according to its chief executive officer.

“That’s the No. 1 priority on more M&A,” CEO and Chairman Don Knauss said yesterday in an interview at an analyst conference in Boca Raton, Florida. Clorox also would consider international acquisitions and personal-care brands to supplement its Burt’s Bees skin-care line. The Oakland, California-based company has made health-care purchases in the past two years.

“We’ll continue to look at bolt-on acquisitions” in Latin America, the Middle East and perhaps Southeast Asia, Knauss said. He said Clorox’s health-care business was “basically nonexistent” three years ago and now generates more than $100 million in annual sales.

The company rejected multiple takeover proposals from Icahn last year, with the highest valuing it at $10.7 billion, or $80 a share. Icahn sought to install himself and 10 others on Clorox’s board after his initial offer, then withdrew his slate in September after concluding that shareholders wouldn’t back his plan to sell the company. He subsequently sold his holdings.

Clorox was little changed at $68.10 at 9:34 a.m. in New York. The shares gained 5.2 percent last year.

Icahn Proposal

Icahn had proposed that Clorox seek potential buyers including Procter & Gamble Co. and Kimberly-Clark Corp. and also said he’d consider breaking up the company. Knauss said the company’s portfolio of businesses is “congruent” after it divested the auto-care unit in 2010, with all remaining brands sold in grocery stores. “The whole is greater than the sum of its parts,” he said.

The company’s disparate brands include Clorox bleach, Kingsford charcoal, Fresh Step cat litter and Hidden Valley salad dressings.

A purchase by larger competitors wouldn’t make sense since they’re focused on emerging markets, Knauss said. “We’re not strategically aligned with what they’re trying to do,” he said.

Clorox said Icahn’s bids undervalued the company and it would stick with its so-called Centennial strategy to expand sales of key brands.

The company, which generated 21 percent of its $5.2 billion in sales last year outside of North America, plans to increase that number to at least 25 percent, Knauss said.

(Updates with share price in fifth paragraph.)