In a landmark move for the beauty industry, E.l.f. Beauty has announced its acquisition of Hailey Bieber's beauty brand, Rhode, in a deal valued at an impressive $1 billion. This significant agreement was revealed jointly by both companies on Wednesday, marking a notable moment in the evolving landscape of beauty brands.

This acquisition comes on the heels of a recent report from WWD, which indicated that Rhode had engaged JP Morgan and Moelis to explore potential deal options just a month prior. Hailey Bieber expressed her enthusiasm about the partnership, stating in an interview with WWD, "They support founders, they want to help push the founders’ vision and get behind them. That’s where we are with Rhode, and I’m ready to get to the next place.” This ambitious vision includes plans for international expansion, as Bieber put it, “more places, more faces.”

E.l.f. Beauty is no stranger to acquiring and nurturing founder-led brands. The company previously acquired Naturium in 2023 and also incubated Alicia Keys’ Keys Soulcare, a fact that resonated with Bieber. “This is my baby, and to find a home for it is really not an easy process — it’s very scary,” she admitted. “When I met the E.l.f. team, we had a lot of similarities when it came to the importance of community and team building.”

The acquisition marks E.l.f.'s largest deal to date, comprising $800 million in cash and stock, payable upon closing, with an additional potential earnout consideration of $200 million based on the future growth of Rhode over a three-year period. To finance this substantial undertaking, E.l.f. secured $600 million in debt financing.

Despite E.l.f.’s previous success, including being one of the top-performing companies on the New York Stock Exchange in the first half of last year and surpassing the $1 billion milestone in net sales, the company has faced challenges, particularly concerning tariffs, as approximately 75 percent of its products are manufactured in China. This has resulted in a notable decrease in the company's share price, down around 25 percent year-to-date.

In a candid discussion, E.l.f. chairman and CEO Tarang Amin revealed that talks with Rhode began in October. “E.l.f. Beauty is on fire, and it was a desire to fuel that fire with the acquisition of Rhode,” he stated. The rapid growth of Rhode is particularly striking; in less than three years, it has soared from zero to $212 million in net sales from direct-to-consumer channels with just ten products. “The momentum and everything that Hailey has fits our ethos as a company, of wanting to invite her into our family and her entire team and be able to transform the beauty industry,” Amin added.

Launched in 2022, Rhode gained instant popularity, particularly for its “glazed doughnut skin” aesthetic that Bieber popularized on Instagram. The brand started with a carefully curated selection of products, and by the end of 2024, it emerged as the top skincare brand by earned media value, boasting an incredible growth rate of 367 percent from the previous year.

Rhode has since diversified its offerings beyond its initial range of lip balms, serums, and moisturizers, expanding into color cosmetics and phone accessories. Notably, it has also secured a partnership with Sephora in North America, set to launch in late 2025. This acquisition not only provides E.l.f. with a rapidly growing brand but also facilitates its entry into Sephora U.S., which Amin highlighted as a testament to Sephora’s confidence in Rhode. “Going to every single U.S. and Canadian store this fall, followed by the U.K. by the end of the year, shows the confidence [Sephora] has,” he remarked. “They are great purveyors, and every beauty brand wants to go to Sephora.”

Initially, when Rhode began its search for buyers and enlisted banking support, there was skepticism regarding whether the $1 billion valuation could be achieved due to broader market conditions and the brand's significant marketing expenditures. Competing brands, such as Selena Gomez’s Rare Beauty and Makeup by Mario, have struggled to secure buyers, but Rhode defied the odds, emerging as one of the fastest beauty brands to reach a billion-dollar acquisition.

As part of the acquisition agreement, Hailey Bieber will remain actively involved with Rhode, serving as its chief creative officer and head of innovation. In this role, she will oversee creative initiatives, product innovation, and marketing, while also acting as a strategic adviser to the combined companies. “I want to continue to push innovation — innovative products, innovative marketing, and I know they’ll be able to continue helping us,” Bieber stated.

Leadership at Rhode will continue under co-founders Michael D. Ratner and Lauren Ratner, alongside CEO Nick Vlahos, who will manage the brand from its Los Angeles headquarters. Amin noted that all brands within the E.l.f. Beauty portfolio experienced growth last year, with Naturium and Keys Soulcare achieving record sales figures.

Regarding future mergers and acquisitions, Amin emphasized a commitment to organic growth within the existing brand portfolio, stating, “A billion-dollar deal is the biggest we’ve ever done in our history, which talks about our excitement and our confidence, but also gives a big responsibility to make sure we’re living up to everything Hailey wants.”

This acquisition follows E.l.f.'s earlier acquisition of the masstige skincare brand Naturium for $333 million, which was part of a broader strategy to enhance the company's standing in the skincare market. The Naturium acquisition allowed E.l.f. to double its skincare penetration to 20 percent and quickly expand Naturium's availability in retailers such as Ulta Beauty in the U.S. and Shopper’s Drug Mart in Canada.

In an interview last summer, Amin reflected on the benefits of acquisitions, stating, “One of the things we get with acquisition is greater scale right away. What we get with something like a Naturium is they went from zero to over $90 million in sales in three years. We liked the fact that it already had a good sales basis and a fully developed team that we could continue to build.”

The news of this acquisition coincides with E.l.f.'s announcement of a 4 percent increase in fourth-quarter net sales, totaling $332.6 million, surpassing Wall Street's expectations of $327 million. The adjusted net income for the quarter stood at $45.2 million, with adjusted diluted earnings per share reaching 78 cents, exceeding estimates of 72 cents.

Due to the uncertainty surrounding tariffs, which affect around 75 percent of E.l.f.’s products made in China, the company has not provided a financial outlook for fiscal 2026 at this time. Amin elaborated on the impact of tariffs, stating, “Just like every company, tariffs are impacting us, but we have a mitigation strategy.” Recently, E.l.f. announced a $1 price increase on all its products, which they believe is a small fraction of the tariffs’ actual cost, while still prioritizing consumer value, as evidenced by a 99 percent positive sentiment from their community.

Amin concluded with a cautious approach, indicating that a full-year forecast will be provided once there is more clarity regarding the direction of tariffs, emphasizing, “we don’t want to put up guidance and then have something change.”