Elf Beauty acquires Hailey Bieber’s Rhode in a billion dollars

Beauty has a new one billion dollars: Hailey Bieber.

Elf Beauty concluded an agreement to acquire the beauty brand of Bieber Rhode in an agreement enhancing it at 1 billion dollars, companies revealed on Wednesday.

The news comes only a month after WWD reported that Rhode had hired JP Morgan and Moelis to explore the transaction options.

“They support the founders, they want to help push the vision of the founders and put themselves behind them,” said Bieber about the agreement with Elf in an interview with WWD. “This is where we are with Rhode, and I’m ready to arrive at the next place.”

This will include international expansion – or, as Bieber said, “more places, more faces”.

This is not the first Elf rodeo with brands led by the founder: the company acquired Naturium in 2023 and incubated the Keys Keys Soulcare, Alicia Keys, an attractive fact for Bieber.

“It’s my baby, and finding a house for this is really not an easy process – it’s very scary,” said Bieber. “When I met the ELF team, we had a lot of similarities with regard to the importance of the community and team strengthening.”

The biggest case to date

The agreement marks the largest to date ELF and consists of 800 million dollars in cash and shares payable at the end, and an additional consideration of $ 200 million on the future growth of the brand over a period of three years. To finance the agreement, Elf obtained $ 600 million in debt funding.

He also comes at a time when Elf, who was One of the most efficient companies on the New York Stock Exchange in the first half of last year and exceeded the Significant milestone of $ 1 billion In net sales, has recently faced opposite winds. These are namely in the form of prices, with 75% of its products manufactured in China. As a result, the company’s share price is down approximately 25% of the year to date.

In an interview, the president and chief executive officer of the Elf, Tarang Amin, revealed that he has been in discussion with the Rhode since October.

“Elf beauty is on fire, and it was a desire to fuel this fire with the acquisition rhode, “he said.” In less than three years, going from zero to $ 212 million in net sales, directly to the consumer, with only 10 products-I would never believe that if someone told him, “he said.” The momentum and all that Hailey corresponds to our ethics as a business. “”

Drawing on the content of the Bieber ice donut skin on Instagram, Rhode launched in 2022 with a number of actions conservation units closely published on its website. At the end of 2024, it was the first brand of skin care by media value won, having increased by 367% compared to the previous year.

Since its launch, Rhode has extended beyond the initial lip balms, serum and moisturizer to involve color cosmetics, telephone cases and a recently confirmed partnership with Sephora in North America, which will start later in 2025. The brand’s net sales reached 212 million dollars in the 12 months finished on March 31.

THE acquisition Gives Elf more than a simple buzzing brand at a rapid growth: it will also mark Elf’s entry into Sephora Us “going to each American and Canadian store this fall, followed by the United Kingdom by the end of the year, shows confidence (Sephora),” said Amin about the launch. “These are big providers, and each beauty brand wants to go to Sephora.”

When Rhode initially hired bankers, the sources were skeptical that the evaluation of a billion dollars could be respected, citing wider factors in the landscape of mergers and acquisitions as well as the brand’s heavy marketing expenses. Indeed, a series of other brands – including the rare beauty of Selena Gomez, Mario’s makeup, Kosas, Merit, Jane Iredale and more – have gone to the market and have not yet found buyers.

But Rhode put the trend, with a source noting that it is the fastest majority of $ 1 billion or more in style.

Bieber remains on

As part of the agreement, Bieber will serve as director of the creation of the Rhode and chief of innovation, supervising creation, product innovation and marketing. She will also act as a strategic advisor to combined businesses.

“I want to continue to push innovation – innovative products, innovative marketing, and I know they will be able to continue to help us,” said Bieber.

The co -founders Michael D. Ratner and Lauren Ratner and CEO Nick Vlahos will continue to direct the brand of his Los Angeles office.

Amin also noted that each brand of the Elf Beauty Stable experienced growth last year, the sales of Naturium and Keys Soulcare reaching peaks of all time.

As for whether Elf provides more mergers and acquisitions, Amin stressed that its main objective is the organic growth of its existing brand portfolio.

“An agreement of $ 1 billion is the biggest that we have ever made in our history, which talks about our excitement and our confidence, but also gives a great responsibility to ensure that we live in everything Hailey wants and therefore I would say that it will be the accent for us at the moment. How much can we develop our brand portfolio? How much can we continue to disrupt the beauty industry? He said.

In August 2023, Elf acquired the Massstige Skin Care Naturium de Center brand for $ 333 million as a wider strategy to give the company’s stamp in the skin.

With this acquisition, it has doubled its penetration into skin care at 20% and has not waste time to extend the Naturium footprint in Ulta Beauty in the United States and Shopper’s Drug Mart in Canada.

In an interview with WWD last summer, Amin said: “One of the things we get with the acquisition is immediately on a larger scale. What we get with something like a naturium is that they have gone from zero to more than $ 90 million in sales in three years. We liked the fact that he already had a good sales base and a fully developed team that we could continue to create.

The news of the acquisition occurs while Elf’s net sales increased by 4% to 332.6 million dollars to its fourth quarter enclosed on March 31. This beat Wall Street’s expectations of $ 327 million. The adjusted net profit was $ 45.2 million. The diluted profit adjusted by action was 78 cents, estimates of 72 cents.

Due to the wide range of potential results related to prices, the company does not provide financial prospects for the year 2026 for the moment.

Amin noted that around 75% of Elf products are manufactured in China, while the Rhode is mainly manufactured in Italy and South Korea.

“Just like each company, the prices have an impact on us, but we have an mitigation strategy,” he said. “Last week, we announced to our community that we will increase all the prices of Elf and what we told them is that it is a fraction of what the prices really cost, but we really care to preserve a great value of consumers. We had a 99%positive feeling.”

As for what the company will be likely to publish a forecast of the full year, it said: “As soon as we have a resolution on the place where the prices are going, and we do not want to set up advice, then have something change.”