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When they founded Harry's as a shaving start-up nearly nine years ago, Andy Katz-Mayfield and Jeff Raider sought to shake a decades-old business dominated by two industry giants.
Now they join forces with one of them.
Edgewell Personal Care, the company that owns the Schick and Wilkinson shaver brands as well as Hawaiian Tropic, plans to announce Thursday it will buy Harry's for about $ 1.37 billion in stock and cash. The agreement will lead Mr. Katz-Mayfield and Mr. Raider to lead Edgewell's operations in the United States.
This is one of the most recent recent examples of an established business buying a younger, more agile Internet-based competitor who is reaching out to consumers in new ways. That includes deals like Unilever, which buys the Dollar Shave Club, another sensational sensation in the world of shaving, for a billion dollars three years ago, as well as Walmart to acquire online clothing supplier Bonobos for about 310 million dollars.
Harry's sells razors, hairspray and face lotions, as well as Flamingo's line of women's razors and waxes, directly to consumers over the Internet, offers subscriptions (a number of blades delivered to your home each months) and entered into a collaboration with clothing retailer J. Crew. Based in New York, he owns the German factory that manufactures his blades and has invested in other companies such as Hims, a start-up selling products to prevent hair loss.
Edgewell, based in Shelton, Connecticut, was separated from Energizer Holdings in 2015 and its oldest brand, Wilkinson, began manufacturing razors. in 1898.
According to Euromonitor data, the Edgewell and Harry combination brands will remain far behind the Gillette brand of Procter & Gamble, which held 47.3% of the US market last year. Edgewell's top brands held about 13.6% of the market, compared to 2.6% for Harry.
In an interview, Edgewell and Harry's executives said they saw an opportunity to create a new, large consumer products company with global reach and new marketing methods for its customers.
"We have an interesting product portfolio, but we have not found a way to communicate with the consumer," said Rod Little, CEO of Edgewell.
Discussions between the two companies began in earnest shortly after Mr. Little was appointed to his position in March, the leaders said. Harry's management team had been considering alternatives, such as an initial public offering, but the combination with an established brand ultimately made sense.
"It took us where we wanted to go faster than some alternative routes," Katz-Mayfield said.
Under the terms of the agreement, which was approved by both boards Wednesday, 79% of Edgewell's offer – just over a billion dollars – would be in cash. The rest would be in stock, giving Harry's investors an approximate 11% stake in the merged company.
Messrs. Katz-Mayfield and Raider will become co-chairs of Edgewell's US operations, which will give them a bigger perch and more brands to watch and reorganize. Mr. Little will remain the Managing Director of the combined business.
The agreement is expected to be finalized by March 31, 2020.
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