Nail in the Coffin for Construction Adhesive Deal: Lessons from the FTC's Successful Challenge of Henkel's Acquisition of Liquid Nails

The FTC notched a recent win in federal court, securing a permanent injunction halting the combination of the two dominant brands of construction adhesives, Loctite and Liquid Nails.  In the recently unsealed decision, the court focused on the extensive head-to-head competition between the parties and the importance of brand equity in siding with the FTC, offering important lessons for merging parties.   

Background 

Loctite and Liquid Nails are the dominant brands in U.S. construction adhesives, described by a witness at trial as “the Coke and the Pepsi of the construction adhesive brands world.”  In April 2025, Henkel (the owner of Loctite) agreed to acquire Liquid Nails and related brands from private equity firm AIP for $725 million.  Party documents indicate that antitrust risk was front of mind during the transaction negotiation, and to address this risk, the parties built a breakup fee into their agreement and allowed almost eighteen months to gain regulatory approval. 

The FTC filed suit in the Southern District of New York in December 2025, and a seven-day bench trial was held in July 2026.  The court permanently enjoined the transaction on August 14, 2026, and the redacted decision was released on September 11, 2026. 

The Court’s Decision 

Despite the court’s recognition of differences in chemical composition, functionality, price, and quality across the spectrum of available construction adhesives, the court accepted the FTC’s relevant market of construction adhesive cartridges sold in the retail channel (i.e., big-box home centers like Home Depot, independent hardware stores, etc.) under which the combined entity would hold more than 80% share.  

The court found that Loctite and Liquid Nails are the only two suppliers offering a full suite of multi-purpose and project specific construction adhesives in the retail channel, that the parties directly compete on price and for shelf space in that channel, and that the parties shared strong brand equity—the key to competition in construction adhesives.  The court cited numerous ordinary course documents from the parties’ business community suggesting direct and close competition between Loctite and Liquid Nails.   

The court rejected defendants’ four principal arguments that the transaction would not substantially lessen competition: that the parties do not compete head-to-head; that market-share analysis failed to account for other bidders in the competitive process; that existing competitors would constrain the merged firm; and that large retail power buyers would protect consumers from price increases.  The court identified three anticompetitive harms that would flow from the merger: significant upward price pressure, elimination of head-to-head competition, and the reduction of consumer choice as retailers rationalized their portfolios.  According to the court, each of these theories would be an independent reason to enjoin the deal.  The court also found that a primary rationale for the deal was to “shore up its construction adhesives and block other brands,” and citing to the parties’ own documents. 

Core Lessons 

The decision offers several concrete lessons for companies evaluating acquisitions in concentrated markets, in particular for consumer products and other industries where brand is a significant factor. 

1. Ordinary course documents are key.  The FTC relied heavily on the parties’ ordinary course documents that showed longstanding and significant head-to-head competition between the Loctite and Liquid Nails brands, which provided substantial support for the FTC’s arguments related to market definition, brand equity, and competitive effects.   Parties entering into merger agreements should carefully consider how their internal documents describe the competitive landscape and the deal rationale. 
2. Understand your customers. Negative customer testimony can be decisive—particularly where, as here, three customers make up more than 60% of all sales. Smaller customers like Menards confirmed they would have limited alternatives if the merged entity raised prices and might have to pass those costs to consumers.  And despite evidence that large big-box customers had resisted price increases in the past, the Court did not agree that buyer power would ameliorate the potential for post-merger price increases.  Parties should consider potential impact on different categories of customers, build that into their risk assessments as part of the consideration of the transaction and overall risk allocation.
3. Consider how a remedy strategy may affect litigation risk. In this case, the litigation focused entirely on the merits, and the parties did not attempt to “litigate the fix” by including a divestiture or other remedy proposal in its litigation strategy, which could have shifted the litigation focus to the viability of the divestiture proposal.  This is a contrast to other recent merger challenges, including the DOJ’s 2022 challenge to Assa Abloy’s acquisition of Spectrum Brands’ Hardware and Home Improvement division, that focused heavily on whether the divestiture proposal sufficiently addressed the underlying competitive issues.  
4. Parties considering potentially challenging deals should carefully weigh their remedy options, and where feasible, develop credible structural or behavioral remedies early on in the process that can be deployed to address competitive concerns pre-complaint, or shift the litigation strategy at trial away from the underlying merits, which may be particularly helpful in a concentrated market or where internal documents may be challenging. 
5. Ensure the merger agreement adequately accounts for and allocates antitrust risk. The FTC filed suit in December 2025 after only 8 months of investigation (a typical, if not compressed timeline for a merger that presents contentious issues), and despite an expedited trial timeline, the court’s August 14 opinion was handed down only a few weeks before the parties’ termination date.  Where the risk of a successful agency challenge is material, consider whether a longer outside date, a more robust antitrust efforts covenant, or a more significant reverse termination fee adequately compensates for that risk. 
6. Plan for federal court litigation as the default theatre for trial. In recent significant merger challenges, including Tapestry, IQVIA, and now Henkel, the FTC has bypassed its administrative process and filed directly in federal district court for a permanent injunction, a strategy that is championed by Chairman Ferguson.  Companies should assume federal court is the likely forum from the moment of signing.  Deal teams should build that timeline into the transaction structure accordingly, including early retention of economic experts.