The Anglo-Dutch consumer products maker will pay cash for the US toiletry delivery business though a Unilever spokesman declined to comment. The maker of Dove soap said it expects to close the purchase in the third quarter.
Unilever will look to expand the subscription model Dollar Shave Club has used since 2012 to accumulate 3.2m customers and take on brands such as P&G’s Gillette and Edgewell Personal Care’s Schick in the estimated $3bn US men’s shaving products market.
It’s Unilever’s biggest US acquisition since its $3.7bn purchase of haircare maker Alberto Culver in 2011, and it follows Danone’s purchase of WhiteWave Foods as European companies seek the safer haven of the US economy in the wake of Britain’s vote to leave the EU.
At the $1bn price, Unilever is paying five times projected 2016 revenue, a valuation that Exane BNP analyst Jeff Stent said is inflated because the target “has seemingly not made any money and is being replicated by all manner of competitors.”
Dollar Shave Club started to lose share in 2015, most notably to Gillette’s new online shave club, analysts at Euromonitor said in a note.
Putting Unilever’s resources behind Dollar Shave Club will make life more difficult for P&G, Mr Stent said. The two companies already battle it out in markets like shampoo and deodorants in the US. Unilever shares were little changed in London trade.
Online shave clubs are attracting consumers with better value for money, along with the convenience of having razors delivered.
California-based Dollar Shave Club has used advertising that pokes fun of the high price and overly-technical nature of branded razor blades to boost its sales, which have grown from $4m in 2012 to $152m last year.
Members can pay $1 a month for five cartridges of a simple two-blade razor or $9 a month for 4 cartridges of a six-blade product dubbed “The Executive.” More recently it’s expanded into hair pomade, skin moisturisers and even toilet wipes.