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BATAVIA, Ohio -- In a move that surprised many in the CPG and natural foods industry, Clorox Co., which makes Clorox bleach, Kingsford charcoal, and Brita water filters yesterday bought natural HBC company Burt's Bees in a $950 million cash deal.
According to published reports, Clorox is paying 5.5 times the $170 million Burt's Bees expects to make in 2007 sales, banking on its large distribution network and Burt's Bees' compound annual growth rate of 25 percent to pay off in the long run.
Burt's Bees, originally sold only in health, natural-food, and specialty stores, has recently entered into mainstream retail operations, and can be found in grocery chains such as Safeway and mass retailers like Target, where it entered earlier this year.
Burt's is Clorox's first major entry into personal care, and the acquisition reinforces chairman and c.e.o. Don Knauss' commitment to sustainability and health and wellness. As part of this commitment, Clorox later this year will introduce Green Works by Clorox, an environmentally friendly cleaning line aiming a the market supplied by companies such as Seventh Generation.
According to reports, some in the PG industry said the Burt's Bees deal could be a tough branding fit for Clorox. However, if the natural personal care company maintains its "business as usual" under its new parent, as c.e.o. John Replogle said it would, most consumers will likely not even realize the company was sold.