Icahn offers to backstop Clorox auction

NEW YORK (Reuters) - Billionaire investor Carl Icahn said on Tuesday his nominees for Clorox Co's board would try to sell the bleach maker if elected, with him backstopping an auction with a $10.26 billion bid.

The move is the latest salvo in an intensifying battle for Clorox, where Icahn launched a proxy fight after the board rejected two of his buyout offers, the last one worth $10.52 billion, or $80 a share. Icahn is Clorox's largest shareholder, with a 9.51 percent stake.

Icahn also sought to resolve questions about how he would finance his latest $78 per share bid, saying he would pay at least half in cash and the rest in unsecured bonds. The bid is not subject to financing or due diligence.

Earlier, Icahn secured a "highly confident" letter of financing from Jefferies Group Inc , which unlike committed financing does not guarantee the funds would be available.

But doubts remained about the latest move by Icahn, whose bid is widely seen as an attempt to see if any other buyer will emerge.

The shares of the 99-year-old company, which makes a range of products from bleach to Burt's Bees lotions, were up 2.7 percent by the close, but were nearly $8 below Icahn's offer of $78 per share.

"Other potentially strategic buyers have continued to sit on the sidelines despite his efforts to provoke them," Morningstar analyst Erin Lash said.

Clorox is the latest battle for the 75-year-old investor, whose very foray into a stock is known to strike fear in the hearts of corporate directors.

But the fortunes of the corporate raider-turned-activist are far from even and results are not guaranteed. Earlier this month, Icahn lost a proxy battle at Forest Laboratories Inc .

But he also saw his years-long investment in Motorola turn around when Google Inc agreed to buy Motorola Mobility Holdings Inc for $12.5 billion.

Clorox was not available to comment.

RAISING PRESSURE

Icahn first offered to buy Clorox in July for $76.50 per share, a 12 percent premium at the time. After Clorox rejected the bid and adopted a poison pill to make an unwanted takeover more expensive, Icahn raised his bid but was again spurned.

Icahn stepped up the pressure earlier this month, saying he wanted to replace the entire Clorox board. He said he wanted to nominate himself, his son and nine other people for election to the board at the company's next annual shareholder meeting.

Icahn said on Tuesday that a deal would be subject to the approval of the new Clorox board and would be voted on by Clorox shareholders.

"The Clorox shareholders should have the right to decide for themselves whether to accept my bid or a better bid, which I believe will be forthcoming from the sale process," he said.

But analysts and bankers said Icahn may have trouble persuading Clorox investors the bid was high enough.

Using the multiple that Unilever Plc paid for Alberto Culver earlier this year as a guide, Morningstar's Lash said Clorox would be worth about $90 per share.

Bankers and analysts believe the chances are low the bid will pass muster with Clorox's existing board or investors.

"Clorox has shown no interest, so lowering the bid and offering notes isn't that compelling," said an investment banker, who is not involved in the deal.

"I don't think this move is going to motivate anyone to change their mind. Even if Icahn won board control, it doesn't mean anyone will bid," said the banker, who was not authorized to speak to the media.

Clorox shares closed up $1.89 at $70.52 on Tuesday.

(Reporting by Dhanya Skariachan and Martinne Geller in New York; additional reporting by Jessica Hall in Philadelphia; editing by Paritosh Bansal, Phil Berlowitz, John Wallace and Andre Grenon)