Clorox acquires Burt's Bees for $925 million

OAKLAND, Calif. Clorox, known for its namesake bleach and cleaning products, is expanding beyond its core categories by acquiring Burt’s Bees, a maker of natural personal care products.

Clorox is acquiring the company for $925 million net of an additional $25 million payment for anticipated tax benefits. The deal is expected to close by the end of the calendar year.

“The Burt’s Bees brand is well-anchored in sustainability and health and wellness, and we believe it will benefit from natural and ?green’ tailwinds. It is in an economically attractive category with a margin structure that will be highly accretive to Clorox,” stated Clorox chairman and chief executive officer Donald Krauss. “Combined with our new Green Works line of natural cleaning products, and Brita water-filtration products, we can leverage Burt’s Bees extensive capabilities and credibility to build a robust, higher-growth platform for Clorox.”

The U.S. natural personal care market represents about $6.4 billion in sales and is currently growing at about 9 percent annually, according to the company.

Clorox stated that the acquisition is in line with its strategy to pursue growth in areas aligned with consumer “megatrends” in health and wellness, sustainability, convenience and a more multicultural marketplace.

Burt’s Bees president and chief executive officer John Replogle will continue to lead the company, which will continue to be based in North Carolina. Beth Springer, Clorox’s executive vice president of strategy and growth, will oversee the business.

It is estimated that Burt’s Bees will add nearly two points of top-line growth to Clorox in fiscal years 2008 and 2009.

Including estimates of purchase-accounting adjustments and one-time transaction and integration costs, the company anticipates that the transaction will dilute its fiscal year 2008 earnings by about 10 cents to 15 cents per diluted share and that it will be slightly accretive in fiscal year 2009.