E.l.f. Beauty to Acquire Hailey Bieber’s Rhode for $1 Billion

Introduction to E.l.f. Beauty’s Acquisition of Rhode

Hailey Bieber attends the Rhode UK launch party with Hailey Bieber at Chiltern Firehouse on May 17, 2023 in London, England. E.l.f. Beauty announced on Wednesday plans to acquire Hailey Bieber’s beauty brand Rhode in a deal worth up to $1 billion as the cosmetics company looks to expand further into skincare.

Details of the Acquisition

The acquisition – E.l.f.’s biggest ever, according to FactSet – is comprised of $800 million in cash and stock, plus an additional potential $200 million payout based on Rhode’s performance over the next three years. The deal is expected to close in the second quarter of the company’s fiscal 2026 — or later this year. "I’ve been in the consumer space 34 years, and I’ve been blown away by seeing this brand over time. In less than three years, they’ve gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products. I didn’t think that was possible," CEO Tarang Amin told CNBC in an interview. "So that level of disruption definitely caught our attention."

Hailey Bieber’s Statement

In a news release, Bieber said she’s excited to partner with E.l.f. to bring her brand to "more faces, places, and spaces." "From day one, my vision for rhode has been to make essential skin care and hybrid makeup you can use every day," said Bieber. "Just three years into this journey, our partnership with e.l.f. Beauty marks an incredible opportunity to elevate and accelerate our ability to reach more of our community with even more innovative products and widen our distribution globally."

E.l.f. Shares and Quarterly Results

E.l.f. shares dropped about 10% in extended trading after the company announced the acquisition and released results for its fiscal fourth quarter. The company topped Wall Street’s quarterly estimates, but did not offer guidance due to the Trump administration’s changing tariff policy. E.l.f. gets a disproportionate amount of its merchandise from China.

Why E.l.f. is Betting on Rhode

Launched in 2022, Rhode has more than doubled its customer base over the past year and generated $212 million in revenue in the 12 months ended March 31. The company’s growth has primarily come through its website, but it plans to launch in Sephora stores throughout North America and the U.K. before the end of the year. As part of the acquisition, Bieber will serve as Rhode’s chief creative officer and head of innovation, overseeing creative, product innovation and marketing.

E.l.f.’s Growth Strategy

Under her direction, Rhode last year became the No. 1 skincare brand in earned media value — or exposure through methods other than paid advertising — with 367% year-over-year growth. Rhode is a solid match for E.l.f., which has seen growth skyrocket in recent years in large part to its digital prowess. The company has legions of online fans and is known for TikTok marketing that feels more natural to consumers. The company is also looking to dig deeper into skincare, which has become more popular with all age groups, particularly E.l.f’s younger, core consumer.

E.l.f.’s Quarterly Performance

E.l.f. made the announcement as it posted fiscal fourth quarter results, which beat Wall Street’s expectations on the top and bottom lines. The company’s reported net income for the three-month period that ended March 31 was $28.3 million, or 49 cents per share, compared with $14.5 million, or 25 cents per share, a year earlier. Sales rose to $332.7 million, up about 4% from $321.1 million.

Conclusion

E.l.f. Beauty’s acquisition of Rhode is a strategic move to expand its presence in the skincare market. With Rhode’s impressive growth and Hailey Bieber’s influence, the partnership is expected to bring significant benefits to both companies. As E.l.f. continues to navigate the challenges of tariffs and global trade, its focus on digital marketing and skincare innovation is likely to drive future growth.

FAQs

Q: What is the value of the acquisition deal between E.l.f. Beauty and Rhode?
A: The acquisition deal is worth up to $1 billion, comprising $800 million in cash and stock, plus an additional potential $200 million payout based on Rhode’s performance over the next three years.
Q: Who will lead Rhode after the acquisition?
A: Hailey Bieber will serve as Rhode’s chief creative officer and head of innovation, overseeing creative, product innovation, and marketing.
Q: What is the expected impact of the acquisition on E.l.f.’s business?
A: The acquisition is expected to drive growth for E.l.f. in the skincare market, particularly among younger consumers, and expand its digital presence.
Q: How did E.l.f. perform in its fiscal fourth quarter?
A: E.l.f. beat Wall Street’s expectations on the top and bottom lines, with net income of $28.3 million, or 49 cents per share, and sales of $332.7 million, up 4% from the previous year.