Feb 4, 2020 Harry's Razors $1.4B acquisition by Schick might not happen Read More We're sensing friction... Remember when the maker of Schick razors was going to buy trendy subscription shave-startup Harry's Razors months ago? Probably not happening now. The Federal Trade Commission just sued to block the $1.4B acquisition of Harry's by Edgewell Personal Care.
Anti-Competitive: The FTC claims the deal would eliminate a major competitive force in an industry that's mainly being controlled by 2 companies.
Duopoly: Procter & Gamble and Edgewell dominate the shave market — P&G is #1 with Gillete men's razors and Venus women's razors making up around 50% of the market. Schick is #2 with 10%.
Newbies' Edge: Startups like Harry's and Dollar Shave Club pushed shaving giants to lower their prices and offer more options.
But: Now that Dollar Shave was acquired by Unilever for $1B and Harry's was (nearly) scooped, the FTC's concerned that Big Shave brands are buying up startup rivals so they can resume their price-increasing, anti-competitive ways.
Investors feel smooth and relieved... Edgewell shares actually jumped 13% on news of the FTC's deal-blocking lawsuit. Turns out, investors weren't so crazy about a company with a $1.6B market cap dropping $1.4B on a fast-growing (but money-losing) startup. That's why shares plunged 16% when the deal was announced back in May. Still, Edgewell wants fast-scaling Harry's to grow its older slowing razor biz.The Takeaway:If razors are getting such sharp scrutiny... maybe the Justice Dep't and FTC will finally go after the real giants of American biz. Right now, there are multiple ongoing government-led investigations into Amazon, Apple, Google, and Facebook. Could Instagram be forced to split from Facebook? Or AWS broken off from Amazon? YouTube from Google? Jul 31, 2019 Shaving just cost Procter & Gamble $8B because Gillette couldn't keep up Read More Your sink cabinet has a soul... and it's filled with Tide, Febreeze, Bounty, and Tampax. They're some of the VIP brands behind Procter & Gamble. The stock rose 4% after its earnings were released, but P&G also reported one huge number: a $5.4B loss — that's because it reevaluated and adjusted the value of its Gillette razor brand big-time:
2005: P&G acquires Gillette for a smooth $57B.
Right now: P&G has adjusted Gillette's valuation down by hefty $8B.
Blame beards... P&G claims "lower shaving frequency" is behind Gillette's decline, jumping on the "because Millennials" bandwagon. Shaving happens less often (down 11% in the last 5 years) and with cheaper razors — Dollar Shave Club (now owned by Unilever) and Harry's (acquired by Edgewell Personal Care) have snagged Gillette's market share. Sophisticated, "Mach-filled," 20-blade razors are out.The Takeaway:Pricing is power... Despite #GilletteProblems, we mentioned P&G's stock rose 4%. That's because sales surged 7% — the biggest jump in over a decade. Half that rise comes from P&G charging higher prices from detergent to tampons (the other half is just selling more of them). The conglomerate has been raising prices, but consumers keep paying. That's power you can't buy.
Jun 21, 2019 Dividend stocks are living their best lives thanks to the Fed Read More So we’re cutting rates now?... Wednesday, America's central bank set the stage to reduce interest rates nationwide later this summer. It’s a sign those wise government bankers are concerned the trade war could hurt the economy, so they’re saying “we got your back” — Lower rates would support borrowing, potentially offsetting trade war pain. The Fed hasn’t cut interest rates yet, but markets are acting like they have...
Mortgage rates: A 30-year house loan had a 5% average interest rate in November. Now it’s down to 3.86%, close to record low levels.
10-Year US government bonds: The interest the government pays for 10-year loans dropped below 2% yesterday for the first time since 2016.
We're talking supremely unsexy industries... Electric utilities, packaged goods, wireless — lower rates could change that. NextEra Energy, Procter & Gamble, and Verizon don't have the cachet of self-driving meal kits startups these days. But they all boast profitable track records and hook up shareholders with cash dividends every quarter. Most fast-growing companies don't pay dividends at all.The Takeaway:Everything’s relative... The dividends of these companies haven’t changed much since December. But interest rates overall have. With lower rates today compared to December, these dividends look good to investors that just want reliable cash payments. That's why the Fed's words Wednesday are bringing sexy back.