NEW YORK, United States —  Edgewell Personal Care on Monday scrapped its debt-heavy $1.37 billion deal for peer Harry's Inc after the US competition regulator sought to stop the deal, sending the Schick razor maker's shares surging about 26 percent.

The Federal Trade Commission earlier this month filed a lawsuit to block the acquisition, arguing it would harm competition in the U.S. shaving industry.

"We are disappointed by the FTC's decision and continue to disagree with its position," said Chief Executive Officer Rod Little.

Harry's and Dollar Shave Club, which was acquired by Unilever at reportedly five times its annual revenue in 2016, had challenged the dominance of Procter & Gamble Co's Gillette razors with their online subscription models.

Edgewell, which makes Wilkinson Sword and many private label razors, announced the deal in May 2019 in a bid to boost its online presence and attract a new set of customers, but investors were concerned with the level of debt post-acquisition.

At that time, Edgewell said its gross debt would be 5.2 times earnings before interest, taxes, depreciation and amortization on close.

Sales at the company's wet shave unit, which would have benefited from the Harry's acquisition, have declined for six quarters, and Edgewell expects the unit to be challenged in North America for the rest of the year.

"We have a hard time seeing what the future holds for Edgewell as a standalone company ... as it is left with a portfolio of sub-scale brands that need significant investment to accelerate growth," Barclays analyst Lauren Lieberman said.

Little said the company would pursue other acquisitions.

"What we could have done together just uniquely with the combination of assets and capabilities that, frankly, there's not another combination out there I see that would match that," Little said on the conference call.

Harry's said it would have prevailed in the litigation against the FTC and was disappointed with Edgewell's abandonment of the deal.

Edgewell said privately-owned Harry's intended to pursue litigation against it.

Separately on Monday, Edgewell reported its biggest quarterly profit beat in at least two years, boosted by demand for its skin and feminine care products and lower advertising expenses.

Shares of the Shelton, Connecticut-based company were at $37.97 in morning trade.

By Praveen Paramasivam; Editor: Sriraj Kalluvila