Henkel to Sell 29% Stake in Clorox

German consumer goods company Henkel plans to swap its 29% stake in Clorox for a combinationof Clorox’s operating businesses and its stake in a joint venture with Henkel, and $2.1 billion in cash.

Nine months ago, Henkel, owner of the Persil brand in Germany and Schwarzkopf hair care andcosmetics, paid $2.9 billion for US soap maker Dial. Henkel executives said the company plannedto finance the Dial deal partially by divesting existing holdings in either Clorox or Ecolab. The Cloroxagreement removes the uncertainty that has been hanging over both Clorox and Ecolab, in whichHenkel has a 28% stake, executives said. By acquiring its own shares back, the possibility isremoved that Clorox could have been purchased by a third party.

Henkel will exchange its Clorox shares for a newly-formed subsidiary of Clorox that will hold aportfolio of operating businesses including Soft Scrub, Combat, Home Mat and Home Keeper.The businesses have aggregate sales of $160 million and are “highly profitable,” Henkel executivessaid.

The deal will end the relationship between the two companies, including Henkel’s right torepresentation on Clorox’s board.