Clorox Is Moving Toward Sale of Auto Brands STP, Armor All

Clorox Is Moving Toward Sale of Auto Brands STP, Armor All

Consumer-products giant Clorox Co. is moving toward the sale of its two automotive brands, STP and Armor All, and will likely launch a process to auction the well-known names, according to people familiar with the matter.

The Oakland, Calif., company has been analyzing its large product portfolio and could hire an investment bank within the next couple of months to handle the sale, these people said. STP and Armor All have combined annual sales of about $300 million.

It isn't clear how much the two brands would fetch in a sale, though several people estimated Clorox would try to get about $800 million or more. STP, a maker of oil treatments, brake fluid and fuel-system cleaners, is seen as more valuable than Armor All, which makes automotive polishes, auto-glass cleaners and upholstery cleaners.

Clorox, which got STP in the 1999 acquisition of First Brands Inc., is in the process of "cleaning house," said one person familiar with the situation. The company has received expressions of interest in the two units, this person said.

"They are thinking of alternatives for the businesses and do not see them as strategic," one person familiar with the discussions said.

A Clorox spokeswoman declined to comment on "specific actions the company might take."

Investment bankers have approached consumer-product companies, such as Unilever, and private-equity funds to gauge their interest if STP and Armor All are put on the block, according to people familiar with the matter.

A sale of STP and Armor All would be the latest example of brands changing hands as weakness in consumer spending prods companies into deal mode.

In September, Sara Lee Corp. agreed to sell its international personal-care business to Anglo-Dutch consumer giant Unilever NV for about $2 billion. Sara Lee made a deal in December to sell its European air-freshener business to Procter & Gamble Co. for about $500 million. P&G is said to be considering selling some of its brands, such as snack-food brand Pringles.

Clorox has one of the widest-ranging product portfolios in the household-products sector: In addition to its namesake bleach, the company's brands include Kingsford charcoal, Hidden Valley dressing and Brita water filters. Nevertheless, Clorox has long regarded auto-care brands Armor All and STP, to be outside the company's core, preferring to focus on products that promote wellness, sustainability and affordability.

The automobile waxes and polishes market has declined in recent years, with U.S. sales of $83 million last year, down 22% from 2005, according to market-research firm SymphonyIRI Group. Those figures don't include data from Wal-Mart Stores Inc. or club stores. Armor All's top-selling waxes and polishes have a market share of more than 40%, according to SymphonyIRI.

In 2007, Clorox Chief Executive Don Knauss told analysts that the company would prune brands that weren't performing sufficiently, identifying the auto brands as potential targets.

Last week, Deutsche Bank analyst Bill Schmitz noted Clorox is "looking at selling off slower growing brands to focus on building or acquiring faster-growing businesses, or to accelerate its share-repurchase program."

Clorox had sales of $5.45 billion its latest fiscal year, up 3% from a year earlier. The recession has been difficult for Clorox, with many of its products, especially Kingsford charcoal, Clorox bleach and Glad trash bags, susceptible to competition from cheaper private-label versions.