Moody's Places Clorox on Watch Following $2.1 Billion Deal

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CINCINNATI ( -- German package-goods power Henkel said late yesterday it will dispose of its 29% stake in Clorox Co. while again increasing its presence in the U.S. household and personal products business by taking Clorox's Combat insecticide and Soft Scrub cleaning brand in the deal.

Pay down debt
For Henkel's shares in the company, Clorox will exchange $2.1 billion, its insecticide and Soft Scrub businesses, and its stake in a European joint venture. Henkel said last year it was considering selling its Clorox stake to pay down debt following its acquisition of Dial Corp. The deal with Clorox still requires regulatory approval.

Addition of Combat and Soft Scrub is the latest in a series of moves by Henkel in the past year to increase its presence in U.S. consumer goods, including acquisition of Dial and Advanced Research Laboratories, marketer of the Citre Shine and Got2Be personal care brands.

Little media support
Omnicom Group's DDB Worldwide, San Francisco, handles Clorox brands, including Combat and Soft Scrub, but both have gotten light media support of less than $10 million in recent years. Henkel's U.S. agencies are DDB, Los Angeles and Omnicom sibling GSD&M, Austin, Texas.

As part of the deal, 135 Clorox employees will move to Henkel. Credit rating agencies Fitch and Moody's placed Clorox credit on watch with negative implications because of the cash outlay for the shares.

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