FTC Moves to Block Henkel’s Plan to Put Loctite and Liquid Nails Under One Roof

What happened and why it matters for the adhesive market

The Federal Trade Commission has filed suit to stop a deal that would combine Loctite and Liquid Nails, two of the best-known names in construction and household adhesives. The agency says the merger would reduce competition in the market where homeowners, builders and big-box retailers buy caulks, sealants and construction adhesives. Henkel, the company behind Loctite, is pushing to acquire the business that makes Liquid Nails. The FTC argues that bringing the two brands together would give the combined firm too much market power — enough to raise prices or cut back promotions in stores that millions of consumers rely on.

For shoppers the change might sound small — it’s glue, after all — but regulators see a market where a few big brands and a handful of national retailers interact closely. The FTC’s move immediately raises the odds that the deal will be slowed, altered with divestitures, or stopped entirely. That matters for manufacturers, suppliers and retailers because it touches the way products are priced, displayed on shelves and marketed to both contractors and do-it-yourself buyers.

How traders, competitors and stores are likely to react

In the short run, this is a negative development for Henkel. The risk that the deal will be blocked or burdened by heavy remedies will reduce the value of the expected cost savings and sales synergies investors typically expect from mergers. If Henkel had paid a premium to secure the deal, that premium could look overstated now. Expect the company’s shares to trade with more volatility until the legal picture clears.

Competitors stand to gain if the deal is stopped. Smaller adhesive makers and private-label lines sold by major retailers could pick up shelf space and promotional budgets that a combined Loctite–Liquid Nails business might otherwise have captured. Retailers themselves — particularly the big national chains that sell these products — face a mixed outcome. On one hand, fewer dominant brands can mean lower wholesale pressure and more room for private labels. On the other hand, retailers value strong national brands that draw foot traffic; losing a potential combined supplier could force them to renegotiate terms or adjust category strategies.

Suppliers of raw materials used in adhesives may see little immediate change to volumes, but pricing power matters. If the FTC is right and the merger would have allowed a bigger firm to push prices up at retail, that could eventually trickle back to end demand and thus supplier order books. For consumers, the likely effect the FTC worries about is higher shop prices, fewer sales and less innovation aimed at the DIY market — though those outcomes are not guaranteed and would depend on how concentrated the market is after any remedy.

Across the medium term, the biggest market effect will come from the remedy pathway. A negotiated fix with meaningful divestitures could preserve competition but dilute the acquirer’s benefits. A full block would preserve the current competitive map and give rivals a clearer opening.

The FTC’s antitrust theory and the legal issues that will decide this case

The FTC’s complaint will rest on the idea that Loctite and Liquid Nails compete head-to-head in particular slices of the adhesive market — especially construction adhesives used by professionals and serious DIYers. Regulators will try to show that these are narrow product markets where national brands carry extra weight and where national coverage matters to retailers and contractors.

Key evidence will include market shares, the concentration of sellers, and the ways buyers choose products. The agency will focus on whether the deal would materially raise concentration, as measured by standard tools used in merger review, and whether that change would be likely to cause unilateral price increases or reduced nonprice competition like fewer promotions and less innovation.

Another angle the FTC may use is “vertical” or “vertical-influence” concerns tied to retail channels: if the combined firm had stronger leverage with national chains, it could disadvantage rivals through shelf placement, promotions or exclusive supply terms. Past enforcement actions in consumer goods show regulators are willing to challenge deals where branded products become more concentrated and where national distribution matters to competition.

How courts view the underlying market definitions will be decisive. If a judge accepts a narrow market that isolates construction adhesives from broader adhesive categories or private-label options, the FTC’s case gains strength. If the defense can show broad competition across many adhesive types and suppliers, the agency’s case weakens. Expect expert economic models, store-level data and internal documents about pricing and retailer negotiations to play a central role.

How Henkel and the other side are responding, and what comes next

Henkel has said it will defend the transaction and argues the deal would benefit customers by combining complementary product lines and improving distribution efficiency. The company has signaled that it believes the merger does not lessen competition and that remedies could address any concerns. The seller of the Liquid Nails business has said it will cooperate with the process but has made no public commitment about potential concessions.

The next procedural steps usually include discovery, expert reports and a hearing. The FTC could seek a preliminary injunction in federal court or press an in-house administrative trial before an agency judge. Either path typically takes months; a full contest can stretch into a year or more, especially if appeals follow. Possible outcomes include a negotiated divestiture of overlapping product lines, behavioral promises to preserve access for rivals, or a full block that unwinds the deal.

Investor watchlist: what to watch and how to think about risk

For investors, this is largely a regulatory-risk story. Here are the practical items to watch and why they matter:

• Formal filings and complaint details: look for how narrowly the FTC defines the market and what evidence it highlights about price effects and retailer power.
• Statements from large retailers: if major chains publicly oppose the deal, that strengthens the FTC’s leverage; neutral or supportive retailer comments would help Henkel’s case.
• Any proposed remedies: divestitures that leave strong stand-alone rivals reduce the chance of a full block and limit downside for Henkel.
• Court schedule and preliminary rulings: an early injunction or adverse interim decision raises the odds the deal is stopped.
• Share-price reaction and volatility: expect near-term weakness for Henkel if the market had priced in the deal’s benefits; a sustained hit suggests the market doubts a clean approval.

Bottom line for investors: the FTC challenge is a clear near-term negative for Henkel’s strategic plan and raises the probability that any gains from combining the two brands will be curtailed. However, a negotiated remedy could salvage some value. Traders will find volatility; longer-term holders should watch legal milestones closely as the clearest signals of direction.

Sources

• ftc.gov