NEW YORK — If you can’t beat them, join them.
The owner of Schick razors is acquiring upstart shaving company Harry’s for $1.37 billion, continuing a trend of consolidation in the shaving industry, where established brands have struggled with the rise of digital-savvy newcomers. About 79% of the deal is cash, and the remainder stock.
Harry’s has bedeviled Schick and Gillette for years using innovative subscription plans, sleek packaging and competitive pricing.
Under the agreement announced Thursday, investors in Harry’s Inc. will take a stake of about 11% of Edgewell Personal Care Co., which manages Schick and other brands. Edgewell gets the Harry’s brand and access to the company’s prized direct-to-consumer marketing base.
Harry’s founders, Andy Katz-Mayfield and Jeff Raider, will become co-presidents of Edgewell’s U.S. operations when the deal closes, expected in early 2020.
“This is not a situation where we’re going to get lost inside of some larger company,” Katz-Mayfield said in a conference call with analysts. “What was really compelling about the combination was our ability to take on bigger roles and have more impact.”
Harry’s becomes the latest shaving startup to combine forces with a major consumer brand company. Unilever bought Dollar Shave Club for $1 billion in 2016. Last year, Gillette’s parent company, Procter & Gamble, bought Walker & Co., marketer of the Bevel, a shaving brand aimed at black consumers.
Since its founding in 2013, Harry’s, based in New York, has captured about 2.6% of the $2.8 billion men’s shaving industry, according to Euromonitor market research firm.
Gillette, the brand that defined men’s shaving for a century, saw its U.S. market share fall from about 70% a decade ago to less than 50%. Schick, the No. 2 razor brand, has a market share of about 10%.
Harry’s has expanded into brick-and-mortar retail, through partnerships with Target and Walmart. Harry’s and Dollar Shave Club capitalized on simmering consumer frustration with increasingly pricey razors. 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.