DTC’s Daily Digest brings you the latest news on the world’s fastest growing direct-to-consumer and challenger brands. In today’s edition: Harry’s threaten legal action over scrapped Edgewell deal; SoftBank-backed Brandless shutting down; and Starling secures £60m funding.
Harry’s threaten legal action over scrapped Edgewell deal
A deal to combine two of America’s biggest shaving companies collapsed in acrimony after opposition from antitrust officials prompted Edgewell Personal Care to abandon its pursuit of upstart rival Harry’s.
Edgewell, the maker of Schick razors, said on Monday that regulators’ determination to block the USD$1.37bn acquisition in court meant it was no longer worth pursuing, a decision that led Harry’s to threaten legal action of its own against its erstwhile suitor.
The scrapping of the deal comes a week after the Federal Trade Commission filed a lawsuit to prevent the tie-up, arguing that the proposed combination would “eliminate one of the most important competitive forces” in the shaving business.
Regulators argued that for many years Edgewell enjoyed a “comfortable duopoly” in the shaving market along with Gillette owner Procter & Gamble.
Harry’s said it was “perplexed by the FTC’s process and disregard of the facts” and believed the companies would have prevailed in litigation. Harry’s would not comment on the nature of its case against Edgewell but said in a statement that it was “disappointed by the decision by Edgewell’s board not to see this process to its conclusion”.
SoftBank-backed Brandless shutting down
Brandless Inc., a direct-to-consumer personal care and packaged goods company, is closing down. Brandless will stop taking orders and cut about 70 employees, less than two years after SoftBank Group Corp.’s Vision Fund said it would invest USD$240m in the startup.
“I’m proud of what we created at Brandless,” Interim Chief Executive Officer Evan Price said in a statement, adding that it had become to difficult for the company to compete in the direct-to-consumer market. “I’m confident the next great brands of tomorrow will be built from this experience.”
The closure marks an embarrassing failure for SoftBank, which is struggling with other investments made by its USD$100bn tech fund, including Oyo, Uber Technologies Inc., and most notably, WeWork.
The company is cutting all of its staff except for about 10 employees, who will say on to fulfil outstanding orders, and handle customer questions. The Vision Fund paid out about USD$100m of its promised investment into Brandless up front. However, a promised second tranche never arrived as the company struggled to hit targets while building out its own warehouse and distribution network.
Starling secures £60m funding
UK-based digital banking group Starling Bank has reportedly secured £60m from existing investors Merian Global Investors and Harry McPike’s JTC. The banking group has successfully raised £323 million and the latest funding follows two investment rounds of £105 million, which were led by Merian in 2019.
According to TechCrunch, Starling revealed that its customers have opened 1.25 million accounts since its banking app launch in May 2017. The company also holds more than £1.25bn in deposits.
The digital bank stated that the new funds will support its expansion, which will include a European launch that has been delayed due to Brexit. Starling currently has 800 employees across offices in London, Southampton, Cardiff, and Dublin. As part of this raise, it says it will issue more shares to employees. According to the FT report, Starling staff and management will own 20% of the bank following the new funding.
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