Edgewell Personal Care has decided to pull its planned $1.4 billion takeover of millennial razor brand Harry's due to competition concerns from the US Federal Trade Commission (FTC).
Consumer products company Edgewell, which owns brands such as Wilkinson Sword, planned a takeover of Harry's worth $1.4 billion but decided to pull its bid following a threat of legal action by the FTC due to competition concerns.
Founded in New York in 2013, Harry's has become a significant competitor in the men's grooming market, which has been long dominated by established companies such as Edgewell and Procter & Gamble.
The firm, which sells razors, face washes, lotions and some women's products, began as an online retailer before launching its products in stores in 2016. According to Euromonitor, Harry's has captured around 2% of the US men's shaving industry.
Edgewell's proposal came amidst the expansion of the male grooming industry, as more men spend money on skin creams, hair products and deodorants. This trend has resulted in mergers, including Unilever's $1 billion acquisition of Dollar Shave Club in 2016.
However, the FTC has threatened to file a lawsuit to stop Edgewell from taking over Harry's, arguing that it will cause "serious harm to consumers".
In a press release, the FTC said it has authorized staff of the Bureau of Competition to file suit to enjoin Edgewell’s proposed acquisition of Harry’s, Inc. and alleges that the proposed acquisition would eliminate one of the most important competitive forces in the shaving industry.
The commission pointed out that "the loss of Harry’s as an independent competitor would remove a critical disruptive rival that has driven down prices and spurred innovation in an industry that was previously dominated by two main suppliers, one of whom is the acquirer."
Edgewell chief executive officer (CEO) Rod Little said that while his firm disagreed with the FTC's view, it did not have the resources to fight the lawsuit.
Little said: "Given the inherent uncertainty of a potential trial, the required investment of resources and time... we determined that proceeding with our standalone strategy is the best course of action for Edgewell."
