Clorox Investor Tries to Ban 'Poison Pill' Against Icahn

A Clorox investor filed a lawsuit against the company, in hopes to bar the company from using a "poison pill" against Carl Icahn.

The pension fund of Dearborn Heights Police and Fire Retirement System filed the lawsuit in Delaware on Tuesday and alleges that negotiation instead of the "poison pill" could be used with Icahn.

"Not only is the Icahn proposal plainly negotiable, but it contemplates and encourages the Clorox board to explore what alternative transactions might be available from Clorox's strategic competitors," the pension system said.

Icahn made an initial $10.2 billion bid for the company on July 15^th, though also encouraged the Oakland-based company to solicit bids from Procter & Gamble, Kimberly-Clark, among others.

Clorox rejected his bid forcing Icahn to bump up his bid to $10.7 billion. After this offer, the company decided to pass a shareholders-right plan that would make it more expensive for Icahn to take over the company.

The shareholders-right plan would allow discounted shares to shareholders if any one shareholder acquires more than 10 percent of the company in a takeover attempt.

The "poison pill" seemed to be excessive given that many thought Icahn was just trying to "pump and dump" the stock, but the pension fund states the company is not acting in good conscience-whether Icahn's bid is serious or not.

"In refusing duly to consider the Icahn proposal, or other alternatives, the board is not acting in good faith and is deriving an improper personal benefit in impeding the sale of Clorox," the retirement system said.

A spokeswoman for Clorox told Bloomberg that "the lawsuit is without merit and (Clorox) intends to vigorously defend itself."