(Bloomberg)—U.S. antitrust officials are suing to block Edgewell Personal Care Co.’s $1.4 billion deal for Harry’s Inc., putting in jeopardy Edgewell’s plans to revamp its nearly 100-year-old Schick razor brand. Harry’s is No. 201 in the 2019 Digital Commerce 360 Top 1000.
The Federal Trade Commission said Monday that it would file a complaint in federal court to stop the acquisition on antitrust grounds, saying the tie-up will eliminate competition between the two razor makers.
“Harry’s is a uniquely disruptive competitor in the wet shave market, and it has forced its rivals to offer lower prices, and more options, to consumers across the country,” Daniel Francis, a deputy director in the agency’s competition bureau said in a statement. “Edgewell’s effort to short-circuit competition by buying up its newer rival promises serious harm to consumers.”
Edgewell agreed to buy Harry’s in May to access the direct-to-consumer model that’s shaking up industries from toothbrushes to socks by introducing new brands online, circumventing traditional retail. The company, which also owns Edge shaving products and Banana Boat, is trying to revive lagging sales after years of grueling competition in an industry dominated by Procter & Gamble Co.’s Gillette.
The FTC said Edgewell and Procter & Gamble (No. 674) for years operated their respective Schick and Gillette brands of men’s razors as a “comfortable duopoly” with annual price increases not driven by changes in costs or demand. As a result of Harry’s entering the market, Procter & Gamble and Edgewell were forced to reduce prices and develop new products.
Harry’s competitor Dollar Shave Club (No. 165) was acquired by Unilever in 2016 and is the top ecommerce shaving retailer in the Top 1000. However, Harry’s 5-year compound annual growth rate in online sales is a whopping 195.2%, well above the Top 1000 5-year median CAGR of 18.5% and surpassing Dollar Shave Club’s 5-year CAGR of 76.5%, according to Top500Guide.com.
Harry’s expanded beyond direct-to-consumer sales, starting with Target Corp. (No. 16) in 2016 and now selling at Walmart Inc. (No. 3).
“We are disappointed that the FTC is attempting to block our combination with Edgewell, and are evaluating the best path forward,” Harry’s co-founders Jeff Raider and Andy Katz-Mayfield said in a statement.
Edgwell didn’t immediately respond to a request for comment.
The FTC’s lawsuit presents an added hurdle to Edgewell’s turnaround plan for its grooming business. As the deal’s closure approached, Bloomberg News reported that Harry’s co-founders Raider and Katz-Mayfield would lead its parent company’s North American operations.Favorite