German detergent maker Henkel is continuing its growth strategy in North America, starting with a multibillion dollar deal with Clorox.
Germany's Henkel is angling for a bigger international market
Henkel, Europe's largest detergent maker, has agreed to sell back its 29 percent stake in Clorox for some $2.8 billion (€2.25 million) in cash and assets.
The move is a bid to finance Henkel’s purchase last year of US-based manufacturer Dial, which has given it a better position in the North American market.
In a separate deal -- again aimed at beefing up its US businesses -- Henkel said it would buy Ohio-based adhesives firm Sovereign Specialty Chemicals for around $575 million. The move follows hard on the heels of Henkel filing for antitrust approval to take-over another US gluemaker, Orbseal.
The Clorox deal leaves the Düsseldorf-based consumer goods group $2.1 billion in cash, ownership of some Clorox brands and a stake in a Spanish cleaning-products joint venture. Henkel will acquire Clorox's interest in several businesses, including Combat, several other insecticides and Soft Scrub cleanser.
Persil ad from the 1920s
The sale of the Clorox stake comes nine months after Henkel, owner of Persil brand detergent in Germany as well as Schwarzkopf haircare and cosmetics products, paid $2.9 billion for Dial, the US-based manufacturer of Dial soap and Purex detergents.
Henkel’s acquisition of Dial last year came after Henkel lost out to Procter & Gamble in the battle for Wella, a German haircare product company.
The Dial purchase was part of the company’s stated strategy to take on global players like Unilever and Procter & Gamble. Not only does the deal give Henkel a bigger foothold and a portfolio of well-known brands in North America, it gives the German firm more negotiating leverage with Wal-Mart, the world's biggest retailer.
Meanwhile, Henkel also struck a $575 million agreement to buy Sovereign Specialty Chemicals, a Chicago-based adhesives company.
Assuming antitrust approval, the transaction is expected to close by the end of the year, Henkel told news services.
“The acquisition of Sovereign Specialty Chemicals strengthens our position in North America in an ideal way,” Henkel management board chairman Ulrich Lehner said in a prepared statement. “We now gain an important position in the US craftsmen segment and achieve an excellent complement to our industrial business.”