Edgewell Personal Care, which owns the Schick brand of shaving products, had been set to acquire Harry’s for $1.37 billion, but the company is backing out of the offer after the FTC sued to block the transaction on Feb. 3. In a statement, Edgewell president and CEO Rod Little cited the “required investment of resources and time” as to why the company moved away from the deal.
“We are disappointed by the FTC’s decision and continue to disagree with its position,” Little said. “After extensive consideration and discussion, and given the inherent uncertainty of a potential trial, the required investment of resources and time, and the distraction that a continuing court battle would entail, we determined that proceeding with our standalone strategy is the best course of action for Edgewell and our shareholders.”
The FTC’s actions earlier this month came as a shock, as the deal between Edgewell and Harry’s was originally made in May 2019. At the time, both companies responded to the FTC’s intentions, with Little stating, “We will review the FTC’s decision and respond in due course.” Now, despite beating earnings, Edgewell is no longer going to fight back against the federal regulator.
Harry’s co-founders and co-CEOs, Jeff Raider and Andy Katz-Mayfield, said in a statement, “We continue to be perplexed by the FTC’s process and disregard of the facts. We know the merger would have benefited consumers greatly. We believe we would have prevailed in litigation, and are disappointed by the decision by Edgewell’s board not to see this process to its conclusion. We are also proud of what we’ve built at Harry’s and we are stronger than ever; we’re growing, profitable, well capitalized and excited about the opportunities ahead for our business. Moving forward, we will continue to do what we do best: develop, manufacture and sell exceptional products at an honest price, and always put our customers first.”
Additionally, Harry’s plans to pursue legal action against Edgewell, to which the company responded in a SEC filing, saying “such litigation has no merit.”
The news has rocked the DTC industry, as it sets a precedent for future acquisitions. In the FTC’s compliant, the government agency stated the acquisition would have eliminated competition between brands, and that no other shaving brand could reach the scale Harry’s did in brick-and-mortar again. It’s unclear whether the FTC will pursue any similar action against other acquisitions that have occurred this year, such as P&G’s purchase of women’s shaving brand Billie in January.