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July 15, 2011 5:44 PM

In $10.2 Billion Bid for Clorox, Icahn Facing Off Against Wachtell Again

Posted by Brian Baxter

UPDATE: 7/18/11, 6:40 p.m. The New York Times reports that Clorox has rejected Carl Icahn's takeover bid and adopted a poison pill shareholder rights plan. 9/23/11, 6:05 p.m. Icahn has cut short his proxy contest at Clorox because of a lack of support from other shareholders, according to The Times.

Reviewing a $10.2 billion takeover bid made Friday by activist investor Carl Icahn, The Clorox Company has hired Wachtell, Lipton, Rosen & Katz to help chart its next move.

Icahn’s $76.50-per-share offer represents a 21 percent premium on Clorox's stock price as of December 20, the day before Icahn began building his current 9 percent stake in the company, which appears designed to elicit other offers for the target, according to The New York Times.

A letter filed with the SEC by Jeffrey Whyte, general counsel for investment bank Jefferies & Company, states that the financing is in order for Icahn's bid to proceed. In a statement acknowledging Icahn's offer, Clorox said it would "review the proposal in due course," and then brought Wachtell in to advise on the entreaty by the renowned corporate raider.

Wachtell corporate partners Andrew Brownstein, Steven Cohen, and Benjamin Roth are advising Clorox. Brownstein is a busy man at the moment. He is also leading a Wachtell team advising ConocoPhillips on its planned division of the company into two entities, which was announced early Thursday. Clorox's general counsel is Laura Stein.

Associate general counsels Keith Schaitkin and Mark DiPaolo from Icahn Associates, a holding company headed by Icahn, are taking the lead in advising Icahn on the Clorox bid. Icahn has not yet retained outside counsel for the attempted acquisition.

In choosing Wachtell, Clorox is turning to a firm that has faced off against Icahn multiple times. The activist investor's battles with Wachtell name partner Martin Lipton, inventor of the "poison pill" takeover defense, are legendary in Wall Street legal circles. (Icahn has called the poison pill "one of the most anti-shareholder provisions ever devised.")

In recent months, Icahn has seen his efforts to take control of such companies as film studio Lions Gate Entertainment and independent power producer Dynegy fall short, and Wachtell took a lead role representing Lions Gate in successfully repelling Icahn's takeover bid. The firm also defended Motorola in a proxy fight with Icahn in 2008 that the financier lost, which ultimately led to the breakup of the telecommunications giant into two separate companies.

The bid for Clorox is likely to generate offers from other firms, something Icahn acknowledged himself, according to The Times. Those most likely to tender offers, Reuters reports, are Procter & Gamble, Unilever, Colgate-Palmolive, Reckitt Benckiser, Kimberly-Clark, Henkel, and S.C. Johnson & Son.

Another company tapping Wachtell for its legal expertise this week is St. Louis-based food conglomerate Ralcorp Holdings. The company announced plans on Thursday to spin off its Post Foods division to shareholders, essentially unwinding a $2.6 billion deal it announced in November 2007.

Wachtell did not immediately provide details about its lawyers working for Ralcorp.

Ralcorp is a longtime client of Bryan Cave, which is also advising the company on the proposed Post Foods spin-off through transactions practice leader William Seabaugh, corporate finance partner R. Randall Wang, and tax partner Philip Wright. Bryan Cave had a lead role advising Ralcorp on its purchase of Post from Kraft Foods nearly four years ago, and the firm represented Ralcorp last year on its $1.2 billion acquisition of American Italian Pasta. (Ralcorp's general counsel is former Bryan Cave associate Gregory Billhartz.)

As for Wachtell, longtime Icahn adversary Lipton turned 80 in June, an event that The Wall Street Journal reported last month has some looking at succession planning.

But with the firm continuing to lock up key corporate assignments--in addition to the ConocoPhillips break up work, Wachtell is advising on the proposed sale of the NBA's Philadelphia 76ers--it appears the next generation of Wachtell lawyers intends to keep the lights on at the firm's Black Rock headquarters in New York for some time to come.

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