Razor maker Harry's raises $155 million in new funding for acquisitions
Razor maker Harry's announced $155 million in new funding, one year after the FTC blocked its agreement to be bought by Schick parent Edgewell for $1.37 billion in cash and stock.
Driving the news: The new money will be used for acquisitions, particularly smaller CPG brands that could leverage the Harry's distribution and production network, co-CEO Jeff Raider tells Axios.
- The Series E round was co-led by Bain Capital Ventures and Macquarie Capital at a $1.7 billion valuation — a higher mark than the original Edgewell deal, even accounting for Edgewell's stock appreciation.
History: Edgewell agreed to buy Harry's in May 2019. The FTC sued the following February, just before the pandemic, arguing that the merger would strengthen a duopoly between Edgewell and market leader Procter & Gamble.
- The FTC's case had flaws, but Edgewell quickly walked (maybe, in part, because it wasn't required to pay a termination fee).
- "We apologized to employees," Raider said. "We had always as founders delivered on promises we’d made to the company and that was a moment we didn’t, and we had to own that. It was on us."
Fast forward: The merger would have put Raider and fellow co-CEO Andy Katz-Mayfield in charge of Edgewell's entire North American business, including a skincare unit with brands like Hawaiian Tropic.
- That caused the Harry's team to spend months planning to run and grow a broader CPG portfolio than just razors. When the deal collapsed, they decided not to let that work go to waste.
- Raider explains: "We had expanded into other standalone brands on our own and were super excited about taking over their portfolio, but when the deal didn't go through we still thought we had come up with compelling ideas."
The current Harry's portfolio includes men's and women's shaving products, shampoos, deodorants, lotions and even fresh cat food.
- Raider added that his "phone is ringing off the hook" from SPAC sponsors seeking to take Harry's public, but that the company has plenty of cash (it was profitable last year) and is in no rush.
The bottom line: The FTC's decision might not have brought down razor prices, but it still might have resulted in a much more competitive personal care market.
- Sometimes the best deals are the ones that you don't make. Even if it's not your choice.