Clorox To Acquire 50% of Bombril

The Clorox Company today announced it has entered into an agreement to acquire 50% of Bombril, the leading cleaning utensils and household cleaners business in Brazil.

“This transaction is a major step in expanding Clorox’s business in Latin America, which is a key element of our long-term growth strategy,” said Clorox chairman and CEO Craig Sullivan. “It provides Clorox with market-leading brands in the largest category in the largest country in Latin America.”

Under the terms of the agreement, Clorox will pay $200 million to acquire, among other rights, a 50% stake in Detergentes Bombril S.A., a new venture to be formed by Bombril S.A. and Clorox. Bombril’s assets that will transfer to the joint venture include trademarks, three production facilities and approximately 1,900 employees. Bombril S.A., which was founded more than 50 years ago, had net customer sales of about $205 million in calendar year 2000.

With its Bom Bril brand of steel wool, Bombril holds a strong No. 1 market position in cleaning utensils in Brazil, which is the largest cleaning products category in that country and in Latin America overall. Bombril also holds the No. 1 position in disinfectant cleaners with Pinho Bril and other brands. In addition, the Bombril portfolio includes other household cleaners, fabric softeners and dishwashing liquid. Bombril also has one of the most extensive distribution networks in Brazil.

The transaction is subject to various closing conditions, including confirmatory due diligence and execution of a shareholders’ agreement that, among other things, will provide for Clorox’s role in the management of the joint venture. The companies expect to finalize the transaction in May 2001. based on preliminary estimates, the transaction would have a positive impact on Clorox’s fiscal 2001 cash earnings while diluting earnings per share by about one cent.

“This agreement sets the stage for Clorox to gain the necessary critical mass to compete effectively and efficiently in the vast Brazilian market,” Mr. Sullivan said. “Bom Bril is a ‘megabrand’ that is well-known throughout Brazil, with market-leading positions in categories that Clorox knows well — steel wool, household cleaners and disinfectants. The Bombril business has long been profitable and brings strong management and a solid infrastructure, including manufacturing facilities, an extensive distribution network, systems and processes. I am confident Clorox’s experienced management team in Latin America will successfully leverage this venture to accelerate the growth of our Latin America platform.”

This transaction follows Clorox’s acquisition of Bon Bril cleaning utensils in Colombia, Venezuela and Peru in March 2000. As a result, Clorox will have rights to the Bom Bril and Bon Bril brand names throughout most of South America and will be the cleaning utensils category leader in the region. Among the other products Clorox manufactures and markets in Brazil are Clorox bleach, X-14 cleaners and SBP insecticides.

Clorox, a $4 billion company, has grown its business outside the U.S. from 7% of sales eight years ago to 19% or $771 million, in fiscal 2000. Latin America is the company’s priority region for international investment in the near term.