The Federal Trade Commission sued Tuesday to block Henkel AG & Co. KGaA from acquiring Liquid Nails for $725 million, arguing that the merger would eliminate competition between the two dominant construction adhesive brands and harm American consumers.
The FTC's enforcement action targets Henkel, the German manufacturer of the industry-leading Loctite brand construction adhesives, which seeks to acquire its main competitor from private equity firm American Industrial Partners. The deal would combine what the FTC describes as the two biggest brands of construction adhesives sold at major retailers including The Home Depot, Lowe's, and Ace Hardware.
According to the FTC's complaint, the merger would eliminate fierce competition between Loctite and Liquid Nails, leading to higher prices, lower quality, and reduced innovation for consumers. The agency specifically cited housing affordability concerns as a key motivation for the enforcement action.
"Affordable, high-quality housing is essential to the American Dream, and the antitrust laws protect Americans from anticompetitive mergers that threaten to drive up the costs of the products we use to build and maintain our homes," said Daniel Guarnera, Director of the FTC's Bureau of Competition.
The FTC alleges that Loctite and Liquid Nails dominate retail shelves across the country as the clear top two brands in the construction adhesive market. Each company has long viewed the other as its primary competitor, creating head-to-head competition that has benefited consumers through lower prices, higher quality products, and increased innovation.
By eliminating this direct competition, the proposed acquisition would significantly increase market concentration and result in a highly concentrated market that violates current antitrust caselaw and the FTC and Department of Justice's joint merger guidelines, according to the complaint.
The timing of the enforcement action comes as the Trump-Vance administration's FTC emphasizes its commitment to protecting consumers from anticompetitive mergers. Guarnera highlighted this focus, stating that the action "underscores the Trump-Vance FTC's commitment to doing our part to make sure that Americans benefit from competition—like the competition between Loctite and Liquid Nails—that lowers the cost of homeownership and home improvement."
Construction adhesives play a crucial role in both professional construction and do-it-yourself home improvement projects. These products are used for bonding materials like wood, metal, concrete, and drywall, making them essential for building and maintaining homes. The retail market for these products spans major home improvement chains where consumers regularly purchase supplies for construction and repair projects.
The proposed merger reflects broader consolidation trends in the construction materials industry, where companies seek to achieve scale and eliminate competition. However, the FTC's intervention signals heightened scrutiny of deals that could impact housing costs, particularly as affordability remains a key concern for American families.
For Henkel, the blocked acquisition represents a setback in its efforts to strengthen its position in the North American construction adhesive market. The company's Loctite brand has been a market leader, but acquiring Liquid Nails would have provided additional market share and reduced competitive pressure.
American Industrial Partners, the private equity firm selling Liquid Nails, acquired the brand as part of its investment strategy in industrial and specialty chemical companies. The $725 million valuation reflects the significant value of the Liquid Nails brand and its market position.
The case will now proceed through federal court, where the FTC will seek a permanent injunction to block the proposed acquisition. The Commission voted 2-0 to authorize staff to seek this permanent injunction, demonstrating bipartisan concern about the competitive implications of the deal.
The outcome could have broader implications for merger enforcement in the construction materials sector. If successful, the FTC's action may signal increased scrutiny of consolidation in industries that directly impact housing costs, aligning with broader policy goals around housing affordability.
Consumers who regularly shop at home improvement retailers may see continued competitive pricing and product innovation if the merger is successfully blocked. The FTC argues that maintaining competition between these established brands benefits consumers through the competitive dynamics that have historically driven improvements in product quality and pricing.
The case represents one of the early enforcement actions by the Trump-Vance administration's FTC, highlighting the agency's focus on protecting consumers from mergers that could increase costs for essential products used in homeownership and home improvement activities.