The Middletown Press (Middletown, CT)
FTC likely to block purchase of razor seller by Shelton corp.
Federal antitrust regulators signaled Monday their intent to block Schick’s corporate parent in Shelton from acquiring Harry’s, describing the razor upstart as “a critical disruptive rival that has driven down prices” in an industry dominated by Gillette and Schick.
The Federal Trade Commission plans to seek a temporary restraining order blocking Edgewell Personal Care’s proposed $1.4 billion purchase of Harry’s, in advance of an administrative trial scheduled for June.
Edgewell Personal Care did not indicate immediately whether it will contest the FTC’s move. The company issued a statement quoting both Edgewell CEO Rod Little and Harry’s co-CEOs Jeff Raider and Andy KatzMayfield that customers would benefit from the combination.
Founded on a subscription delivery model, in 2016 Harry’s expanded into mass retail channels, including a distribution agreement last year with Walmart.
Edgewell established its headquarters in Shelton after spinning off Missouri-based Energizer Holdings in 2015 as an independent company. Edgewell retained a number of personal care brands, including shaving products Schick, Edge, Wilkinson Sword, Personna and Skintimate; as well as other products such as Banana Boat and Hawaiian Tropic sunblock and tanning lotions and Playtex and Carefree feminine care products.
After announcing the Harry’s acquisition last May, Edgewell followed that up in December with a $123 million deal to sell its Diaper Genie and Litter Genie disposal systems to a Canadian company, as well as licensing rights to the Playtex brand for infant products including feeding bottles and cups.
Edgewell recorded a $372 million loss for its 2019 fiscal year, as sales dropped 4 percent to $2.1 billion. Little told investors in November that he sees Harry’s as “the linchpin and accelerator of our transformation,” during a conference call with investment analysts.
“Collectively, our teams have spent thousands of hours working to create a thoughtful and exciting plan for the combined business,” Little said at the time. “A major focus of the integration with Harry’s has been developing a ... culture that leverages the best from each organization — a new, third way.”
But the FTC has now joined as a third-party intervenor, and one with an established track record in scotching mergers on antitrust concerns. On Monday, the FTC said the arrival of Harry’s forced Edgewell and Gillette owner Procter & Gamble to cut the cost of razors they sell to better compete.
“Harry’s ... has forced its rivals to offer lower prices, and more options, to consumers across the country,” said Daniel Francis, deputy director for the FTC’s Bureau of Competition, in a written statement Monday. “The Harry’s and Flamingo brands represent a significant and growing competitive threat to the two firms that have dominated the wet shaving market for decades. Edgewell’s effort to short-circuit competition by buying up its newer rival promises serious harm to consumers.”
Even as the FTC worked on its case against Edgewell and Harry’s, in early January Procter & Gamble announced its own deal to acquire Billie, a New York City startup selling razors at a lower price, and with a marketing emphasis on younger women.
“We’re pretty excited about the Billie acquisition — that’s something that obviously needs to pass regulatory clearance,” said Jon Moeller, chief financial officer of Procter & Gamble, speaking on a conference call the third week of January. “There’s a real unique set of skills, experiences and knowledge between Billie and P&G that we think has the potential to create some real magic — clearly they’ve created, very effectively, a fresh new brand that extends across several categories.”