The Clorox Company says it will acquire Burt’s Bees for $950 million.
Clorox says the acquisition fits its Centennial Strategy to pursue growth in areas aligned with consumer “megatrends.”
Clorox isn’t the only company following the trend. In the past, beauty giant L’Oreal bought The Body Shop, in addition to organic manufacturer Laboratoire Sanoflore, and Tom’s of Maine was acquired by Colgate-Palmolive. Earlier this week, P&G said that it plans to generate at least $20 billion in sales of greener products over the next five years.
Other bidders for Burt’s included Unilever and SC Johnson, according to AdAge.
“With this transaction, we’re entering into a new strategic phase for our company, enabling us to expand further into the natural/sustainable business platform,” said Clorox Chairman and CEO Donald R. Knauss. “The Burt’s Bees brand is well-anchored in sustainability and health and wellness, and we believe it will benefit from natural and ‘green’ tailwinds…Combined with our new Green Works line of natural cleaning products, and Brita water-filtration products, we can leverage Burt’s Bees’ extensive capabilities and credibility to build a robust, higher-growth platform for Clorox.”
In January, Clorox plans to introduce a line of eco-friendly products to be sold alongside its existing bleaches and cleansers. Clorox expects the Green Works line to cost about 20 percent to 25 percent more than its current products.
Beth Springer, Clorox’s executive vice president of strategy & growth will oversee the business.
Based on estimated 2007 net customer sales of about $170 million, Clorox anticipates that Burt’s Bees will add nearly 2 points of top-line growth to Clorox in fiscal years 2008 and 2009.
Some analysts wonder if Clorox is the right fit for Burt’s. “Clorox has virtually zero presence in personal care categories in the U.S,” wrote Lehman Bros. analyst Linda Bolton Weiser (via Market Watch). “We wonder how much Clorox can really do to enhance the distribution of Burt’s Bees.”
But AdAge points out that Burt’s already had plans in place to begin a distribution test with Wal-Mart Stores by year-end. Clorox and Burt’s Bees executives said the distribution power of Clorox, which already gets 26 percent of its sales from Wal-Mart, was a key factor in justifying the deal.
In May, Burt’s Bees established its own standard to define natural personal-care products, vowing to follow its own rules as it works to get other players in the industry to endorse its standard. It will be interesting to see if other, natural brands play ball now that Clorox is at the wheel.