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A deal nearly a year in the making just hit a wall — and this time, it's the federal government holding the sledgehammer. A New York federal court has sided with the Federal Trade Commission, permanently blocking Loctite maker Henkel's $725 million bid to absorb rival adhesive brand Liquid Nails, following a bench trial that wrapped up in Manhattan last month.

The Ruling That Stopped the Deal

U.S. District Judge Katherine Polk Failla issued the order Friday, permanently enjoining Henkel AG & Co. KGaA from moving forward with the acquisition. The court's full reasoning remains under wraps for now, filed under seal, with both sides instructed to submit proposed redactions by Sept. 11 before the public gets a look at the judge's complete rationale.

Who's Involved in the Standoff

Germany-based Henkel had set its sights on acquiring Liquid Nails from Pittsburgh Paints Co., a portfolio company controlled by New York private equity firm American Industrial Partners. Instead of sealing the deal, Henkel now finds itself on the losing end of a case that federal regulators are treating as a clear-cut win for everyday consumers.

Regulators Call It a Win for Shoppers

Daniel Guarnera, who directs the FTC's Bureau of Competition, didn't mince words in a statement Monday, arguing that anyone browsing the aisles of a home improvement store could see plainly why combining Loctite and Liquid Nails would be "a bad deal for Americans."

"This proposed acquisition threatened to drive up the cost of a critical product for building and maintaining homes across the United States," Guarnera said, framing the court's decision as a safeguard for continued competition between the two brands — competition he said translates directly into lower prices and better quality for consumers.

Pittsburgh Paints Signals It'll Move Forward

A representative for Pittsburgh Paints acknowledged the ruling Monday, striking a forward-looking tone rather than one of disappointment. The company said it remains committed to serving customers and growing across its full product lineup, adding that it values its adhesives, sealants and restoration lines and plans to keep investing in the Liquid Nails, Mulco and Homax brands. The statement also pointed to the company's 150-year history of independent operation, framing the ruling as a bump in the road rather than a roadblock.

Henkel, for its part, offered a far more guarded response, with a representative saying only that the company is reviewing the court's decision and does not comment on ongoing litigation.

The Numbers That Sank the Deal

At trial, which kicked off in mid-July and stretched across a full week, the FTC argued that a combined Loctite-Liquid Nails would command a "staggering" 80% share of the construction adhesive market sold through major retailers like The Home Depot, Lowe's and Ace Hardware — a concentration level regulators said would inevitably squeeze out competition, drive up prices, and stall innovation.

Henkel's Defense: Different Products, Different Markets

Henkel's legal team pushed back hard, arguing the two brands weren't really competing head-to-head at all. Liquid Nails, they said, occupies the "basic" end of the market at around $3 a tube, while Henkel's Loctite line sits in premium territory starting at $7 — different products for different budgets, not direct rivals fighting over the same customer. The companies also argued that major retailers hold significant leverage of their own, capable of pulling any product from shelves if prices climbed too high, acting as a natural check on post-merger price hikes.

How Liquid Nails Ended Up in Play

The Liquid Nails brand landed with American Industrial Partners through a December 2024 deal in which the firm acquired PPG Industries Inc.'s U.S. and Canadian architectural coatings business, subsequently rebranding it as Pittsburgh Paints. That portfolio also includes well-known names like Glidden and Olympic. Henkel, meanwhile, operates as a global manufacturer of adhesives, sealants and coatings, while also owning a stable of household consumer brands including All and Persil.

A Rare Legal Path for the FTC

This case stands out for how the FTC chose to fight it. Rather than following the commission's usual playbook — filing an in-house administrative challenge and then seeking a preliminary injunction in federal court to freeze the deal while that internal case unfolds — the FTC took the unusual step of filing directly in federal court, seeking a permanent injunction outright.

Why the FTC Chose a Different Route

FTC Chairman Andrew Ferguson has publicly defended that strategy, saying the direct-to-court approach sidesteps constitutional questions that recent court rulings have raised about administrative proceedings run by federal agencies. He also conceded a practical reality underlying the whole process: in most merger fights, the federal court case ends up deciding the outcome regardless of the path taken, since the commission typically drops its case if a preliminary injunction gets denied, while companies usually walk away from a deal once an injunction is granted.

The Legal Teams

Henkel is represented by David Gelfand, Lina Bensman, Ryan Shores, Kenneth Reinker and Jacob Coate of Cleary Gottlieb Steen & Hamilton LLP. American Industrial Partners is represented by Edward Duffy, Paul Cuomo, Erik Koons, Andrew Lucarelli and Lina Martin of Baker Botts LLP. The FTC's case was handled internally by Abby Dennis, Peggy Femenella, Nicole Lindquist, Alexander Ansaldo, Nathan Brenner, Maria Cirincione, Christopher D'Silva, Justin Epner, Taylor Hoogendoorn, Sean Hughto, Frances Johnson, Sarah Kerman, Edmund Saw and Timothy Singer.