Razor maker Edgewell – the owner of Wilkinson Sword – has abandoned plans for a $1.37bn merger with rival firm Harry’s following opposition from the US Federal Trade Commission (FTC).
Earlier this month, the FTC filed a lawsuit to block the deal, saying it could hurt competition in the US.
Privately owned Harry’s will pursue litigation against the company following the decision, Edgewell said, adding that it believed legal action “has no merit”.
Edgewell president and chief executive Rod Little said: “We are disappointed by the FTC’s decision and continue to disagree with its decision.
“After extensive consideration and discussion, and given the inherent uncertainty of a potential trial, the required investment of resources and time and the distraction that a continuing court battle would entail, we determined that proceeding with our standalone strategy is the best course of action for Edgewell and our shareholders.”
The deal was announced in May last year as Edgewell attempted to increase its online presence and acquire new customers.
However, some investors expressed concern over Edgewell’s expected level of debt following the acquisition.
The company said at the time that its gross debt would be 5.2 times earnings before interest, taxes, depreciation and amortisation when the deal closed.
But the acquisition would have helped to improve sales figures in the company’s wet shave unit, which have declined for six quarters.
“We have a hard time seeing what the future holds for Edgewell as a standalone company … as it is left with a portfolio of sub-scale brands that need significant investment to accelerate growth,” Barclays analyst Lauren Lieberman said, according to Reuters.