Unilever challenges Gillette with $1 billion Dollar Shave deal

Unilever has acquired Dollar Shave Club in a deal said to be worth about $1 billion, gaining a firmer foothold in the burgeoning market for male grooming products and opening up a new front in its battle against Procter & Gamble Co.

Unilever, an Anglo-Dutch consumer products maker, will pay cash for the U.S. toiletry delivery business, said people familiar with the deal, who asked not be identified as the terms weren't disclosed. A Unilever spokesman declined to comment. Unilever should close the purchase in the third quarter, the maker of Dove soaps said in a statement.

Unilever will look to expand the subscription model Dollar Shave Club has used since 2012 to accumulate 3.2 million customers and take on brands such as Procter & Gamble's Gillette and Edgewell Personal Care Co.'s Schick in the estimated $3 billion U.S. men's shaving products market.

It's Unilever's biggest U.S. acquisition since its $3.7 billion purchase of haircare maker Alberto Culver in 2011, and it follows Danone's purchase of WhiteWave Foods Co. as European companies seek the safer haven of the U.S. economy in the wake of Britain's vote to leave the European Union.

At the $1 billion price, Unilever is paying five times Dollar Shave Club's 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.” Still, putting Unilever's resources behind Dollar Shave Club will make life more difficult for Procter & Gamble, he said. The two companies already battle it out in markets like shampoo and deodorants in the United States.