Clorox To Buy First Brands

The Clorox Company will buy First Brands, maker of such household products as Glad Wrap, STP oil treatment and Scoop Away cat box filler, in a $2 billion deal.

Under the agreement announced Monday, First Brands shareholders will receive $39 worth of Clorox shares for each First Brands share outstanding. Clorox will also assume approximately $440 million of First Brands debt.

The deal has already been approved by the boards of both companies. It must still be approved by First Brands shareholders.

Clorox, based in Oakland, Calif., is a marketer and manufacturer of laundry additives, household cleaners, charcoal, auto care products, cat litter and other products. It had sales of $2.7 billion last year.

First Brands is a Danbury, Conn.-based marketer and manufacturer of plastic wraps and bags, auto care products, cat litter, and home fireplace products, with annual sales of $1.2 billion.

"This acquisition is a rare opportunity that strikes a great balance between strengthening our existing portfolio in litter and auto care products while also providing an exciting new platform for the future in the attractive, growing, bags and wraps category," said G. Craig Sullivan, chairman and chief executive of Clorox.

Sullivan noted that First Brands derives approximately 23 percent of annual sales from international operations, primarily in Canada, Australia, New Zealand, and South Africa.

The transaction will be treated as a pooling of interests for accounting purposes, and is structured to be nontaxable to shareholders.

Clorox said it expects to achieve annual cost savings of approximately $90 million, mostly by the end of the first year after the deal is completed.

The company also said it expects the deal to help the bottom line in 1999, at least before approximately $110 million in transition costs and losses on the devaluation of certain assets.