Clorox To Sell Auto-Care Brands to Avista Capital

CHICAGO, Sept 21 (Reuters) – Clorox Co. has struck a deal to sell STP and other auto-care brands to private equity firm Avista Capital Partners for $780 million so it can focus more on lucrative businesses like hospital disinfectants and beauty products.

The household products company in recent years has acquired U.S. brands including Burt’s Bees skin-care products.

Clorox does most of its business in North America, but should look at opportunities to grow in Latin America and Asia after the sale, said RBC Capital Markets analyst Jason Gere.

“They bought Burt’s Bees (so) do they need to buy another company in the U.S.?” Gere said. “There’s more international opportunities for them than anything else domestically.”

Clorox executives have been looking since May to sell the auto-care unit, which includes brands like STP fuel-system cleaner and brake fluid, and Armor All car-cleaning products, to focus more on areas such as sustainable products.

The maker of Brita water filters and Glad storage bags has also been trying to expand in the hospital cleaning channel, acquiring disinfectant maker Caltech Industries earlier this year.

“We’ve been very open about talking about the fact that we are seeking to expand our portfolio, particularly in the area of infection control,” spokeswoman Kathryn Caulfield said.

The company expects the auto-care sale to reduce earnings by 20 cents to 25 cents per share. To offset this, it intends to use its proceeds from the $780 million deal to repurchase stock.

STP and Armor All had global sales of about $300 million in the last fiscal year, Clorox said in a statement on Tuesday. The deal, which the company expects to close by the end of the year, also includes two plants that make auto-care products.

Avista describes itself as primarily an investor in energy, health care and media companies. It was involved in the consumer products sector before it separated from former parent DLJ Merchant Banking Partners, a spokeswoman said.

Clorox shares were down about 1.3 percent at $66.69 in afternoon trading.