Henkel’s Acquisition of Dial Raises Concerns About Clorox

Henkel KgaA’s proposed acquisition of Dial Corp. for $2.9 billion raises new questions about the fate of another U.S. consumer-products company,Clorox Co.

Henkel’s management said it would finance its purchase of Dial by selling some of its stakes in its other U.S. assets, namely a 30% stake in Clorox, Oakland, CA, or a 28% stake in Ecolab Inc., a cleaning- and pest-control-services firm, or portions of both.

The announcement sent Clorox’s shares down on the New York Stock Exchange amid concerns Henkel would unload its Clorox shares, valued at $3 billion, in a secondary offering. Experts said the company’s fate historically has been buffeted by the actions of its competitors. In 1969, Procter & Gamble Co. planned a takeover of Clorox, but two years later had to divest the holding because of antitrust concerns.

In 1974, Henkel began accumulating a stake in Clorox. The two companies set up a research-and-development partnership, co-developing certain technologies, but never actually creating commercial products together.

While Ecolab has a right of first refusal in its contract with Henkel, the terms of Clorox’s deal are different, said Lothar Stenebach, Henkel’s chief financial officer. “We would under normal circumstances offer it to them,” he said, “but strictly speaking there is no ‘right of first refusal.'”

Before Clorox’s fate can be determined, Dial shareholders must vote to accept the offer of $28.75 a share, a process that should be completed by March or April, the companies said.