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A Honey of a Deal

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Transaction Summary:

On October 30, 2007, Clorox Co. ("Clorox") announced the acquisition of Burt's Bees ("Burt's" or the "Company") for $925 million in cash, net of an additional $25 million payment for anticipated tax benefits. Burt's represents a new strategic direction for Clorox and its first entry into the personal care category. The offer represents a multiple of Burt’s estimated calendar 2007 net sales of 5.4X, and a multiple of Burt's estimated 2007 EBITDA of approximately 18.1X. Clorox did not quantify anticipated synergies. In fact, Clorox management emphasized that the valuation was based, instead, on Burt's inherent historical growth rate, the near-term opportunities to expand US distribution in food, drug and mass ("FDM") channels, and the potential to expand the brand into natural adjacencies. Clorox expects to finance the transaction with cash and short term borrowings. At closing, expected at the end of December 2007, Clorox anticipates that its debt to EBITDA ratio will be 3.5X (up from 2.6X prior to the deal). Clorox plans to return to its target debt to EBITDA ratio of 3.0X by the end of calendar 2009. Excluding purchase-accounting adjustments, one time-transaction costs and integration costs (not quantified), Clorox announced that the transaction is anticipated to be earnings neutral in its Fiscal 2008 (ending June 30th, 2008) and "solidly" accretive thereafter.