Edgewell Personal Care’s shares slid 15% Thursday after the parent of the Schick razor-blade brand said it is buying the owner of Harry’s Shave Club in a cash-and-stock deal valued at $1.37 billion.
Edgewell EPC, -16.00%[1] said it would pay 79% of the price in cash and the remainder in stock, financing the deal with a mix of cash on hand and new debt and equity.
“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,” said Rod Little, who became chief executive and president of the company on March 1, after serving as chief financial officer for about a year.
“We didn’t see that coming,” said Wells Fargo analyst Bonnie Herzog of the deal’s announcement.
Harry
“The multiple Edgewell is paying is unclear, but strategically the deal makes sense as it has been playing from behind on e-commerce and the combination immediately increases EPC’s scale and capabilities,” Herzog wrote in a note to clients.
See: This Nike ad showing a woman’s underarm hair is making some people very uncomfortable[2]
The move comes as the razor business continues to grapple with the rise of online shaving clubs, a craze started by Dollar Shave Club, which offers a razor and supply of blades by mail every month for as little as $3.
See: Procter & Gamble’s Gillette razor business dinged by online shave clubs[3]
Read: P&G navigates ‘difficult’ markets for sales growth[4]
Dollar Shave Club was acquired by Anglo-Dutch consumer goods giant Unilever UN, -0.15%[5] ULVR, -0.39%[6] for about $1 billion in 2016. That put the company into direct competition with Procter & Gamble Co.’s PG, -0.23%[7] Gillette, which has traditionally been the market leader in shaving products and razor blades.
Gillette has been forced to cut prices and spend more on marketing to compete with online startups. Edgewell said Thursday its second-quarter sales fell 10% to $546.7 million, below the FactSet consensus forecast of $562 million.
Don’t miss: Makeup for men is a thing now[8]
Net income came to $48.2 million, or...