Fitch Places Clorox on Rating Watch Negative

Fitch Ratings has placed The Clorox Company's CLX) ratings on Rating Watch Negative. The action is in response to Icahn Enterprises L.P.'s (Icahn) sweetened $80 per share hostile offer for Clorox, which values the company at approximately $13 billion. In its current proposal Icahn expects Clorox's leverage to increase to 7 times (x) after financing. On a last 12 month basis this would indicate total debt in the $7.8 billion dollar range. Interest coverage, at an estimated blended interest rate of 6.5% for the new debt as outlined in Icahn's letter to Clorox's board, would be nearly 2.2 times. Despite Clorox's stability and strong brands, efficient operations, and exemplary cash flow generation, leverage of this significance would clearly render ratings deep into non-investment grade territory. Fitch recognizes that an acquisition is not assured.