The Federal Trade Commssion (FTC) yesterday sued to block the proposed acquisition of Harry’s, a US-based razor brand backed by beauty product distributor Grace Beauty, by peer Edgewell Personal Care.
Edgewell agreed in May 2019 to buy Harry’s in a $1.37bn acquisition but the FTC, the US government’s consumer protection and antitrust agency, is seeking to block the deal on competition grounds.
The FTC specifically alleges that Harry’s losing its status as an independent player would “remove a critical disruptive rival” that had forced down prices and increased innovation in a sector that has been largely dominated by Edgewell and consumer goods conglomerate Procter & Gamble.
The agency has filed a complaint in its own administrative court and will also file suit in federal court to secure a preliminary injunction blocking the deal while it investigates.
Founded in 2013, Harry’s markets men’s grooming products such as razors, shaving cream and facial wash as well as accessories through both an online subscription service and third-party retailers.
Edgewell was set to pay approximately 79% of the $1.37bn in cash, with the remainder to be provided in common stock. Harry’s shareholders were expected to own approximately 11% of Edgewell and the deal was expected to close by the first quarter of this year.
Harry’s has secured approximately $400m in funding to date. Grace Beauty Capital, the corporate venturing arm of Grace Beauty, counts Harry’s among its portfolio companies but has not revealed further details of its investment.
Singaporean state-owned investment firm Temasek contributed to a $112m round for Harry’s in early 2018 together with Alliance Consumer Growth and, reportedly, Tiger Global Management and Wellington Management.
The company had previously closed a $75.6m series C round in 2015 backed by Wellington Management and Tiger Global. Its early investors include Thrive Capital, Highland Capital and SV Angel.
Rod Little, Edgewell’s president and CEO, said: “We continue to believe the combination of our two companies would bring together complementary capabilities for the benefit of all stakeholders, including customers.”
