DiviMo's Blog : CLOROX and the ICAHNIAN WAY

I'll tell you what I think but first some background.....

"Carl Icahn is likely to push for a sale of Clorox since his stake is primarily non-voting and because the company is already well managed. The firm estimates a sale could be done in the mid-$80s per share range, but points out other deals for companies with strong brands like Clorox would imply a takeout price of above $100 per share"

The above statement was made back on Feb 14, 2011.

Today, July 15, Icahn made a offer to buy CLOROX (CLX) at 76.50 a share. Billionaire investor Carl Icahn put Clorox in play on Friday with a bid that values the company at more than $10 billion and suggested rivals consider paying much more.

Carl Icahn owned the airline TWA when I worked for that company. I once was in a TWA meeting with Icahn at Mt. Kisco headquarters. Before Icahn bought TWA, another person named Lorenzo wanted TWA badly. Icahn came in and made higher bids for the airline. There was a bidding war between Lorenzo and Icahn. At one point, Lorenzo and Icahn sat down for a meeting and Icahn agreed to go away if Lorenzo would put up some money for Icahn (for his troubkles). Lorenzo refused. Icahn then raised his bid. Later, Lorenzo came back and said he would agree to the terms Icahn stated originally. Icahn refused and said the amount to walk away is higher now. Lorenzo refused. Icahn bought TWA, sold out the 'crown jewels' as it was called then, ran the airline for awhile and walked away with a large profit.

Here's what I think. One, Icahn is a billionaire. He did not become a billonaire being stupid. The media hates Icahn and has never given him is just due. The man is ahead of everyone else in playing this game. Icahn has a plan B, a plan C, a plan D, and so on. I think Icahn knows someone would like to own CLOROX. I don't think he would have come out the way he did here without having some knowledge that others are interested..regardless of what the media is saying.

Icahn in essense has started an auction on CLX. He is asking other interested parties to join in as soon as possible as Ichan has imposed a soft drop dead date of July 29. Other companies know that Icahn doesn't really want CLX but will own it if need be. When he bought TWA, he lowered the ticket price cheaper than his competitors. He is forcing the competitors to take a look. The longer it takes the higher the cost. I see Icahn coming in with at least one higher bid.

Options activity heated up in Clorox earlier this week. Something was already up. Icahn is on record that he or his companies have not purchased options.

It has the highest margins and generates more cash than any domestic household goods maker.  The company has raised its dividend every year since 1977. This year, management boosted the divided by a solid 10%. It now sports a 3.2% yield, which isn’t bad in the current low-interest rate environment. The oxford club had this to say : Wall Street analysts hate Clorox. Only three out of 18 rate it a 'Buy.' And that’s just fine with me. When was the last time one of these guys made you money?Clorox has a safe and growing dividend. It’s a cash flow machine and has one of the shrewdest investors in the world zigging while the rest of Wall Street is zagging. Adding Clorox to your holdings should make your portfolio shine.  " 

This is an interesting story folding. Believe me, someone else wants CLX or Icahn would not have done what he did. Stay tuned (and don't believe all the media negativity on Icahn,  the man knows what he's doing, the media doesn't).