Unilever (LON: ULVR) has announced an agreement to acquire Dollar Shave Club in an all-cash deal that reportedly values the startup at $1 billion (check out the big VC winners in the deal here). That’s not bad for a company yet to turn a profit, even if it has disrupted an industry dominated for years by a single household name, Gillette.
So, how’d they do that and what's it mean for Unilever?
DSC sends razor cartridges to members at three price points: $1, $6 or $9 per month. The company has recently expanded its product line deeper within Unilever’s consumer goods territory by offering Wanderer-branded cleansers, Boogie’s hair paste and pomade, Big Cloud-branded moisturizers and Charlie’s one-wipe toilettes. The business model has shaved off some of Gillette’s market share in recent years, making it a sharp-looking target for Unilever.
According to TheWall Street Journal, Gillette’s parent company, Proctor & Gamble (NYSE: PG), has seen its cut of the men’s razor-blade market in the U.S. drop to 59% from 71% in 2010. Last year, Dollar Shave Club accounted for a reported 5% nick to that market share.
This acquisition shows Unilever making an aggressive play for a greater share of the consumer packaged goods (CPG) market across the personal care product line, for which it’s already well known with brands like Dove. Although we might not see, say, the first month of a Dollar Shave Club membership coming for free with the purchase of Dove Men+Care shampoo—"Woohoo, a whole dollar in savings!"—Unilever now owns one suave player in the fiercely competitive direct-to-consumer delivery market.
Unilever’s acquisition history in CPG also features the exits of several PE-backed companies, including a couple in the personal care line:
Kate Somerville Skincare was acquired by Unilever in 2015. A provider of skin care products, the company operates a branded line of skin creams, sunscreens, facial masks and skin-cleansing products through retailers as well as its website. It had been a portfolio of JH Partners for eight years.
Cosmivore was acquired by Unilever in 2008. A manufacturer of various types of soaps, it also specializes in producing vegetable and animal oils and engages in margarine production. The Ivorian company was previously backed by Emerging Capital Partners.