US blocks one of the world's biggest razor companies from buying Harry's
Posted February 3, 2020 12:09 p.m. EST
Updated February 3, 2020 12:15 p.m. EST
CNN — Harry's was about to be absorbed by one of the world's largest razor companies. Then it hit a roadblock.
The Federal Trade Commission filed a lawsuit Monday to block Edgewell Personal Care, which owns Wilkinson Sword and Schick, from buying startup Harry's. The combination would "eliminate one of the most important competitive forces in the shaving industry," the FTC said.
Edgewell announced its $1.4 billion deal to buy Harry's in Mary 2019. Harry's, along with Dollar Shave Club, has disrupted the men's razor category by selling low-priced razors online. The space has been dominated for decades by Edgewell, and Gillette-owner Procter & Gamble.
The FTC said in a press release that Harry's is an independent competitor and its loss "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."
The agency said Harry's has lowered prices on products produced by Edgewell and P&G, providing "significant benefits" for consumers.
Harry's created Flamingo in 2018, which makes products aimed at women. In a statement, an FTC official said Edgewell's purchase of the two brands would cause "serious harm to consumers."
"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," said Daniel Francis, deputy director of the FTC's Bureau of Competition in a statement.
Harry's is "disappointed" with the FTC's decision and is "evaluating the best path forward," according to a statement that the company sent to CNN Business.
"We believe strongly that the combined company will deliver exceptional brands and products at a great value, and are determined to bring those benefits to consumers," the company said.
Edgewell CEO Rod Little previously said Harry's isn't profitable, which gave investors pause and sent Edgewell's stock lower when the announcement was made in May. By contrast, investors are pleased with the FTC's suit Monday because the stock is 8% higher.
The deal was originally set to close in early 2020. The FTC said the trial would begin in June.
Harry's rivals have been bought by larger companies in the past few years. Dollar Shave Club was bought for a reported $1 billion in 2016 by Unilever. And Walker & Co. — a direct-to-consumer grooming and beauty products company that makes products for people of color — was bought by Procter & Gamble in 2018 for an undisclosed amount.