TGT Target Corp

By Sharon Terlep and Allison Prang 

The struggling maker of Schick razors is buying Harry's Inc., an upstart rival that started selling razors online and has recently expanded into traditional retail stores.

Edgewell Personal Care Co. said it would pay $1.37 billion for the six-year-old company, which, along with Dollar Shave Club, has shaken up the U.S. razor market. Harry's moved into Target Corp. stores in 2016 and recently began selling razors and other men's care products in Walmart Inc.

Edgewell, a smaller, lower-priced competitor to Procter & Gamble Co.'s Gillette brand, has been hit hardest amid the advent of online shave clubs, particularly as Gillette has lowered prices and ramped up marketing to compete.

Gillette has lost ground but still dominates the U.S. market for razorblades with more than half of its sales last year. Edgewell had 15% of the market, while Harry's had 6%, according to Nielsen data provided by Jefferies. Harry's sales have more than doubled in the last year while Edgewell sales fell. Harry's recently started a line of women's shaving products as well.

The deal comes nearly three years after Unilever PLC, the European consumer products giant behind Dove soaps and Axe body sprays, acquired Dollar Shave Club for around $1 billion cash.

Wells Fargo analyst Bonnie Herzog said the deal is a surprise, but wise for Edgewell as it lags behind rivals, particularly online. Edgewell, she said, "is clearly doubling down" in the shave business.

About 79% of the Harry's deal is cash and the rest is Edgewell stock. When the deal is done early next year, shareholders of Harry's will own about 11% of Edgewell, the companies said. Edgewell had a market value of $2.2 billion as of Wednesday's close.

Harry's co-chief executives Andy Katz-Mayfield and Jeff Raider will be co-presidents of Edgewell's U.S. operations. They started Harry's in 2013. Harry's will also get to add a director to Edgewell's board.

Edgewell, whose Schick brand dates back to 1921, was created in 2015 after the company separated its Energizer Holdings Inc. battery business from its personal-care products, which include Hawaiian Tropic sunblocks and Playtex tampons. It reported net sales for its 2018 fiscal year of $2.23 billion.

Write to Sharon Terlep at sharon.terlep@wsj.com and Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

May 09, 2019 08:30 ET (12:30 GMT)

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