2/5/20 - The FTC Sued To Block Harry’s Acquisition By Edgewell

From the Simplr studios in San Francisco, this is your daily briefing.  

Introduction

This is Today in Five, for today, Wednesday, February 5th. Here are today’s headlines in digital disruption.

The Federal Trade Commission announced they sued to block the $1.37 billion dollar acquisition of Harry’s by Edgewell Personal Care. The complaint against the deal was that the merger would eliminate one of the most important competitive forces in a shaving industry long controlled by two well-established players.

First, here are the latest headlines.

H&M Appoints Its First Female CEO

H&M is shuffling its top leadership. The company announced it’s appointing its first female CEO, Helena Helmersson, effective immediately. Helmersson joined the company in 1997 as an economist in the buying department. Before becoming the COO, she also served as the company’s sustainability manager and production manager. She noted in a statement that, as CEO, she’ll continue moving the company along its strategic plan and would have a focus,  “on the customer to continue strengthening our financial development in the short and long term.” She also added that there was potential to expand with both existing and new brands, with new types of partnerships and to continue leading the development towards a sustainable fashion industry.

Hulu CEO Stepping Down

Streaming service, Hulu, also announced a leadership shakeup. The company announced that CEO, Randy Freer, is stepping down from the company as part of a major restructuring of Disney’s direct-to-consumer business. Disney acquired control of Hulu following its acquisition of 21st Century Fox and subsequent deal with NBCU last year. The giant has, up to this point, left Hulu to run business as usual. The new move signals Disney’s plans to streamline its DTC operations, which also includes Disney+ and ESPN+. The changes will also allow the company to better distribute resources across its streaming services, as well as take Hulu to international markets more quickly and efficiently.  

Sephora to open 100 More Stores in 2020

Popular beauty retailer, Sephora, announced they plan to open 100 stores in 2020. It’s the company’s largest rest estate expansion to date, more than doubling its store growth in 2019. The focus on its growth this year will be expanding outside of shopping malls, a place where the retailer has typically been found. Jeff Gaul, the senior vice president of Real Estate and Store Development at Sephora Americas said in an interview, "We love our stores in malls...but the focus on this next 100 is more off-mall locations.”  Sephora will also look to grow in cities like Charlotte, North Carolina, and Nashville, Tennessee, not necessarily urban markets like New York and Los Angeles. The company’s growth move comes at a time when store closures are the growing trend.

The FTC Sued To Block Harry’s Acquisition By Edgewell

The Federal Trade Commission sued to block the $1.37 billion dollar deal where the maker of Schick razors, Edgewell Personal Care, would acquire upstart rival, Harry’s. The FTC alleged that Edgewell’s planned acquisition of Harry’s would eliminate one of the most important competitive forces in a shaving industry that has long been controlled by two entrenched companies. The deputy director of the FTC’s bureau of competition said in a statement that Harry’s, “has forced its rivals to offer lower prices, and more options, to consumers across the country.” All of the FTC’s commissioners voted in favor of the lawsuit, the latest sign that antitrust enforcers remain willing to challenge deals they believe could lead to higher prices for consumer staples.  

Edgewell and Harry’s announced their deal last May, saying the companies were evaluating their options. Edgewell’s president and CEO said,  “We believe the combination of our two companies would bring together complementary capabilities for the benefit of all stakeholders, including customers.”  Harry’s had recently expanded from its online operations into brick-and-mortar stores, posing even more of a threat to powerhouse companies like Edgewell and Proctor & Gamble. It started selling products in Target stores in 2016 and recently began selling products at Walmart. Harry’s chose a sale to Edgewell over going public or staying independent.  

The FTC signaled it would follow a two-tiered process to challenge the deal. The case is the latest in a multitude of merger challenges from the FTC.    

Closing

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