According to the Wall Street Journal on October 5, 2010, Moody's Investment Service increased its rating of Clorox by one step because of their great earning in profits which brought them out of debt--In 2008, they earned $925 million because they took over Burt's Bees. This acquisition brought Clorox closer to the "health-and-wellness" department of the consumer products industry.
However, Moody's Investment Service does not see a change in rating due to Clorox's recent selling of a "private-equity firm" for $780 million.
This boost in ratings could potentially increase the variety of their consumers. Since they are moving more towards the "health-and-wellness" department, their types of consumers will most likely increase because they are now selling a larger variety of products.
This is a great example of the benefits of an acquisition. By taking over Burt's Bees, Clorox is not only diversifying its product line, which as a result will increase its competitive advantage in the market, but Clorox also reduces its costs by making this move. The question is, will the company's overall market value increase. This will be a function of how well Clorox and its acquired company exist as a business unit.
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