Billionaire activist investor Carl Icahn has taken a 9.08 percent stake in Clorox Co , calling the stock undervalued given the company's big brands, sending its shares up more than 9 percent to a new high.
Icahn may seek to have conversations with the company's management to discuss its business, according to a filing with the U.S. Securities and Exchange Commission on Friday.
In the filing, Icahn said the shares were undervalued given Clorox's focus on big trends and brands that are No. 1 in their categories.
Icahn and Clorox were not immediately available for comment.
Clorox is certainly an amalgamation of many different brands that are tenuously held together, perhaps that's what Icahn wants to exploit, said Sanford Bernstein analyst Ali Dibadj.
The company, whose diverse lineup of No. 1 products includes Clorox bleach, Brita water filters and Hidden Valley Ranch salad dressing, has tried to focus its business on growing trends like health and wellness, sustainability, affordability and products geared toward a multicultural market.
It is also working on expanding its international reach.
Last year, Clorox sold off its STP and Armor All auto-care brands to focus on more lucrative areas. It is using proceeds from that $780 million sale to repurchase its stock.
Clorox eyes a bigger business in the area of disinfection. Products such as its namesake bleach and wipes saw sales jump during the H1N1 flu pandemic.
Profit in the latest quarter fell sharply due to a hefty impairment charge for the Burt's Bees personal care business, which it admitted that it overpaid for. Still, Burt's Bees is a leading brand in the natural personal care category and it is the fastest-growing brand at Clorox.
Through Thursday, Clorox shares were up 6.9 percent since the end of June, compared with a 28 percent increase in the Standard & Poor's 500 index over the same period. <.SPX>
Clorox shares ended Friday's trading session up $5.01 or 7.6 percent at $71.26 after climbing as high as $72.43 in heavy afternoon trading on the New York Stock Exchange.
(Reporting by Jessica Wohl and Brad Dorfman in Chicago and Dhanya Skariachan in New York; Editing by Gary Hill and Matthew Lewis)