CHICAGO Billionaire investor Carl Icahn raised his offer to buy Clorox Co (CLX.N) and offered to put $6.2 billion into escrow to convince the bleach maker's board that he is serious about buying if no one else steps up.
In a letter sent to Clorox's board on Wednesday, Icahn raised his bid to $80 per share two days after Clorox's board unanimously rejected his $76.50 bid as "neither credible nor adequate."
His latest bid values Clorox at about $10.66 billion.
Clorox shares were up 3.2 percent at $74.90 after reaching a new high of $75.42. The shares continue to trade below both Icahn's initial offer and the higher $80 per share bid, and analysts have said they do not expect another buyer to emerge.
Icahn, the company's largest shareholder, said that he would put $6.2 billion, including his Clorox shares, in escrow, "to put the question of credibility to rest once and for all."
Clorox said its board would review the revised proposal.
"The increase in the amount of the bid wasn't that substantial and so I would be skeptical that the board would find that to be an adequate or a credible bid," said Kevin Douglas, a partner in the corporate and securities group at Bass, Berry & Sims Plc in Nashville, Tennessee.
Analysts continued to suggest that another, higher offer was unlikely to surface.
PROXY FIGHT LOOMING?
On Friday, Icahn put Clorox in play with an offer of $76.50 per share, valuing the company at $10.2 billion, and suggested that rival companies should consider paying even more for it.
Icahn's new offer values the company at $10.66 billion, based on roughly 133.3 million shares outstanding as of March 31. Excluding the 12.5 million shares Icahn owns, he would pay about $9.66 billion for the rest of Clorox's shares and would also assume $2.125 billion in long-term debt.
Icahn said he did not believe there was any legitimate question about whether he could raise the additional $7.8 billion for the offer on top of his $5.2 billion in shares.
Icahn said he wants to avoid a "costly and debilitating proxy fight" and that he and Clorox Chairman and Chief Executive Don Knauss agree a proxy fight would be "extremely costly and a major distraction for the company."
Icahn has until August 19 to put forward candidates for Clorox's board if he chooses to pursue a proxy fight.
Icahn has pushed for seats on the boards of other companies, such as Mentor Graphics Corp MENT.O [ID:nN12204177]. Earlier this week, Forest Laboratories Inc FRX.N said it would nominate a 10-person board slate including three new members as the drugmaker fends off Icahn. [ID:nN1E76H05U]
Icahn, who owns 9.4 percent of Clorox, wants to let other shareholders decide whether to accept his offer or a higher one if one appears, he said in the latest letter.
On Monday, Clorox rejected the bid and adopted a so-called "poison pill," which expires in July 2012, that would be triggered when a person or group acquired 10 percent or more of its common stock in a transaction not approved by the board.
The shareholder rights plan's 10 percent trigger essentially shuts Icahn out from buying any more shares.
Analysts have said that they do not expect a strategic buyer to emerge, as Clorox is focused on the United States and categories, such as plastic bags, with volatile commodity costs and store branded competition.
"We believe investors concerned about Icahn's bid should take profits," said Wells Fargo Securities analyst Tim Conder.
Icahn Enterprises LP IEP.N and affiliates would escrow $5.2 billion, including Icahn's 12.5 million Clorox shares, if Clorox accepts the offer and allows due diligence. Icahn would also escrow $1 billion against any shortfall in his ability to raise the $7.8 billion debt financing, he said.
(Reporting by Jessica Wohl and Brad Dorfman. Editing by Lisa Von Ahn, Robert MacMillan, Matthew Lewis and Bernard Orr)