Edgewell Personal Care Buys Harry’s For $1.37 Billion: Details About The Deal You Should Know About

By Amit Chowdhry ● May 13, 2019

Consumer products company Edgewell Personal Care announced it is acquiring shaving startup Harry’s for $1.37 billion. Edgewell is known for manufacturing the popular Schick razors, Wet Ones wipes, and Skintimate shaving cream along with other brands.

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This deal was set up with 79% in cash and the rest in stock. And the deal is expected to close at the end of the first quarter in 2020.

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Harry’s raised more than $375 million in funding since it launched (Crunchbase), including a $112 million round from Hims for a minority stake last year.

“The combination of Edgewell and Harry’s is a pivotal step forward in further transforming our organization and strengthening our competitive position and ability to drive sustained growth and value creation,” said Edgewell president and CEO Rod Little. “Building on Edgewell’s and Harry’s complementary strengths, our combined company will have leading brands and omni-channel capabilities that are essential to meet the needs of the modern consumer and win in today’s market environment. We welcome Harry’s entrepreneurial employees and look forward to working closely with Andy and Jeff, whose ingenuity and demonstrated success will enable us to take our U.S. business to the next level. We are excited about our future and the opportunities we have to deliver superior long-term shareholder returns as a next-generation CPG platform.”

Going forward, Harry’s co-founders and co-CEO’s Andy Katz-Mayfield and Jeffrey Raider are joining Edgewell as co-presidents of all U.S. operations rather than just the Harry’s unit. This will give them the flexibility to move into new categories. Edgewell pointed out that Harry’s will also be able to access Edgewell’s product team and infrastructure to move into new markets. And Harry’s will be able to drive Edgewell’s online growth and “appeal to a broader and more diverse set of consumers.”

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Katz-Mayfield and Raider are also known as co-founders of Warby Parker, which is a lifestyle brand that designs eyewear. They decided to launch Harry’s in 2013 since they believed the prices of razors were overpriced. Harry’s products can be bought via monthly subscriptions or online for $20 per razor. And Harry’s sells its products at Target and Walmart stores. Last year, Harry’s unveiled a women’s shaving brand called Flamingo.

Harry’s launched six years ago and it competes against Dollar Shave Club — which was acquired by Unilever for a reported $1 billion in cash three years ago. And another rival called Walker & Company (creator of the Bevel and Form grooming products) was acquired by Procter & Gamble for an undisclosed amount.

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“When we launched Harry’s six years ago our vision was to create a grooming brand that better met our needs as consumers, and over time, a CPG platform that creates brands people love across more categories. Together with Edgewell, we see a significant opportunity to continue delivering on that vision, leveraging Edgewell’s advanced technology and global footprint alongside our customer-first approach, brand building expertise and omni-channel capabilities. We’re incredibly proud of the brands we’ve created and the team we’ve built, and have tremendous respect for Edgewell and its established brand portfolio. We look forward to what we can accomplish together,” added Katz-Mayfield and Raider.

The combined companies are expecting to generate approximately $20 million of EBITDA in annual cost savings by 2023 driven by production and supply chain optimization, purchasing, and distribution efficiencies. This would be in addition to the $225 million to $240 million of gross cost savings expected to be achieved through the continued execution of Project Fuel — which is Edgewell’s enterprise-wide initiative for transforming the company’s business and cost structure.  According to ResearchAndMarkets.com, the men’s grooming industry is expected to hit $78.6 billion by 2023, which is up from $57.7 billion in 2017.

Goldman Sachs and Perella Weinberg Partners were financial advisers to Edgewell for this deal. And Wachtell, Lipton, Rosen & Katz were Edgewell’s legal advisers.

Centerview Partners worked as the financial adviser to Harry’s. And Latham & Watkins and O’Melveny & Myers served as its legal advisers.