Unilever is buying the on-demand razor delivery service Dollar Shave Club in a validation of the startup’s novel approach to selling men’s grooming products.
The deal price — reportedly around $1 billion — would be about five times Dollar Shave Club’s expected sales in 2016. Dollar Shave Club isn’t profitable.
That is a punchy premium.
Dollar Shave Club, or DSC, delivers razors to your home each month with a subscription model, and as Business Insider’s Dennis Green wrote earlier today, the deal highlights that companies are finally understanding that men are buying shaving and grooming products online.
DSC has grown to about 3.2 million customers since it opened for business in 2012, and has begun to expand its product line beyond razors into other toiletries. It’s also inspired some imitators, including Harry’s and a similar service started by Gillette (which is owned by Unilever rival Procter & Gamble).
Unilever is betting that it can take DSC’s data and distribution strategy global.
Here’s how the deal went down, according to a person familiar with the deal:
After DSC’s latest funding round in November, the Dollar Shave Club began meeting with incumbents in the consumer goods industry.
The company’s founder, Michael Dubin, had long admired Unilever, and about six months ago he met with the president of its North American division, Kees Kruythoff, over dinner in New York.
They hit it off and began to spend more time together, and the idea of merging with a global business that’s able to help with advertising and distribution at scale became attractive to Dubin.
Months of back and forth followed, including “unproductive conversations” around the deal price. Dubin also met with Unilever’s management team and CEO before the two sides could get to an agreement. The company did not open up the process to other bidders.
When the deal closed, Kruythoff told Dubin something to the effect of, “We didn’t buy you, you bought us. Anything you need, we have.”
Kruythoff said in a statement on Wednesday that Unilever plans to “leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential in terms of offering and reach.”
JPMorgan’s vice chairman Noah Wintroub advised on the deal, along with Romitha Mally, a managing director in consumer goods banking. Centerview Partners advised Unilever on the deal.