Economy

Shaving-industry disruptor Harry's to be purchased by owner of Schick

Shaving-industry disruptor Harry's to be purchased by owner of Schick”

The maker of Schick and Wilkinson razors is acquiring upstart Harry's Inc, which first grew as a D2C razor brand, for $1.37 billion, most of it in cash.

Under the terms of the agreement, approximately 79% of the total value of the transaction will be paid in cash and 21% will be paid in Edgewell common stock.

Harry's founders, Andy Katz-Mayfield and Jeff Raider, will become co-presidents of Edgewell's USA operations when the deal closes, probably in early 2020.

Harry's, based in NY, has captured about 2% of the $2.8 billion men's shaving industry since its founding in 2013, according to Euromonitor market research firm.

In a presentation on Thursday explaining the acquisition, Edgewell and Harry's presented a graph claiming that in stores where it is now sold, including Walmart and Target, Harry's takes a 30% category share. P&G itself has made it a point to add more DTC brands to its portfolio via acquisition or in-house growth over the past two years, which likely gave Edgewell more incentive to bolster its personal care offerings. Investors in the company include SV Angel, Highland Capital Partners, Tiger Global Management, BoxGroup, Harrison Metal, Temasek Holdings, Thrive Capital, Brainchild Holdings, Wellington Management, Red Swan Ventures, Grace Beauty Capital, Lakestar, Bullish, Brand Foundry Ventures, blisce/, Andrew Mitchell, Gin Lane, Mo Koyfman, Alliance Consumer Growth, and Light Street Capital. The company also use Edgewell's global scale and infrastructure to introduce Harry's brands into new markets. Their direct-to-consumer models allowed both brands to build a sense of intimacy with customers that traditional brands struggled to replicate, taking years to develop their own direct-to-consumer sites. Dollar Shave Club's market share stands at 8.5 percent.

Edgewell reported that a 15% drop in earnings from its worldwide shave business in its second quarter earnings report Thursday, and stocks of the firm were down nearly 17 percent to $33.12 in afternoon trading. Last year, Edgewell launched a revamped version of its direct-to-consumer site, Schick.com, experimenting with products developed just for the site. In addition, it has acquired two fashionable men's skincare brands, Texas-based Jack Black and the United Kingdom firm Bulldog.

For Edgewell, it intends to capitalize on the "brand positioning" of Harry's to help enhance its presence to appeal to a more diverse group of consumers. Harry's produces its blades at a German factory that Raider and Katz-Mayfield bought for $100 million.



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