P&G to Raise Stake in Clorox Joint Venture

Household products maker Clorox Co. (CLX) said Thursday that Procter & Gamble Co. (PG) would raise its stake in their joint venture and updated the effect of its recent share exchange and financing with Germany's Henkel KGaA (search).

Clorox, which along with other consumer products companies has been grappling with higher commodity costs, also said it would raise prices for its Glad trash bags and GladWare containers by 12 percent to 13 percent from Feb. 1.

Earlier this year, German soaps and adhesives company Henkel shed its 29 percent stake in Clorox, raising money to pay for its purchase of Dial Corp (search). The deal also gave Henkel ownership of some Clorox brands and Clorox's 20-percent stake in a joint venture, Henkel Iberica.

Oakland, Calif.-based Clorox said it now expects its transactions with Henkel to raise earnings per diluted share by $3.27 to $3.38 this year, or by 12 cents to 13 cents excluding a book gain of $3.15 to $3.25 per share on the transfer of businesses and its prior investment in Henkel Iberica.

Clorox said P&G is set to pay the company $133 million to increase its interest in their Glad joint venture to 20 percent, the maximum stake allowed, from 10 percent.

The deal with Cincinnati-based P&G is expected to close in January 2005. The joint venture on technology for bags, containers and wraps was formed in January 2003.

Shares of Clorox, which hit a new 52-week high of $58.20 in early trading, were last up 22 cents at $58.07 on the New York Stock Exchange (search). P&G shares were up 21 cents at $56.33.

Clorox said it still expects sales growth of 3 percent to 5 percent in its second quarter, which ends Dec. 31.

The company expects to earn 51 cents to 55 cents in the second quarter, helped by less marketing spending with retailers.

Analysts, on average, forecast a profit of 51 cents per share, according to Reuters Estimates.

It forecast second-quarter GAAP (search) earnings per share, including the effect of Henkel, of $3.11 to $3.25.

For its fiscal year ending June 30, 2005, including the impact of the businesses transferred to Henkel, Clorox still expects sales to rise 1 percent to 3 percent.

Clorox forecast full-year GAAP earnings, including the impact of Henkel, of $5.80 to $6.01 per share. Excluding the full-year estimated gain on the transfer of businesses to Henkel, but including the impact of the earnings-per-share accretion estimate of 12 to 13 cents, Clorox said it expects full-year earnings of $2.65 to $2.76 per share.

Analysts, on average, expect a full-year profit of $2.72 per share.