The case for Kellogg, Clorox and other legacy companies to go private

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Clorox, best known for its bleach, also owns brands like Pine Sol cleaner, Glad trash bags and Brita water filters.

Those sturdy brands have helped drive strong cash flow and consistent dividend hikes. Clorox is part of the S&P “Dividend Aristocrats” group — companies that have increased their dividends every year for at least the last quarter century, according to Argus Research.

Clorox expects free cash flow for 2019 of about 11 to 13 percent of sales, it recently told analysts. But the company, like other consumer brands, faces competition from upstarts like Seventh Generation cleaners, which Unilever bought two years ago, as well as from cheaper private-label products like Costco’s Kirkland brand. That competition comes as Clorox is forced to hike prices to counteract rising commodity costs.

The company’s organic sales this past quarter dropped a half a percent.

In 2011, activist investor Carl Icahn sought to force a sale of the company, either to himself or to a peer, before ultimately withdrawing those efforts. Today, Icahn’s $80 a share offer for Clorox would be eclipsed by its $148 trading price. With a market capitalization of around $19 billion, it would be tough to find the financing to take it private. But for a willing taker, it could be a cash cow.



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