Elf Beauty (NYSE: ELF) will acquire Rhode, the makeup and skincare brand founded by model Hailey Bieber in 2022. Under the agreement:
Elf will pay Rhode shareholders $800 million at closing, consisting of $600 million in cash and $200 million in new Elf common stock.
An additional $200 million may be paid over the next three years if Rhode meets agreed growth targets.
“Rhode is one of the most beautiful businesses I’ve ever seen,” Elf CEO Tarang Amin said in an interview.
Fast Growth and Gen-Z Appeal
Rhode launched in 2022 and quickly built a loyal following—especially among Gen Z—by focusing on a tight collection of well-priced products such as pocket blush ($24) and lip gloss ($18). For the fiscal year ended March 31, Rhode generated $212 million in sales, Elf reported.
Starting later this year, Rhode products will become available at Sephora, broadening the brand’s retail footprint.
Strategic Supply-Chain Diversification
The acquisition also helps Elf reduce its reliance on China-based manufacturing. Elf currently sources about 75% of its products from China and faces a 55% tariff on those items. Earlier this year, Elf raised prices by $1 across its range—making its Camo liquid blush $7 and Squeeze Me lip balm $4.
Rhode’s supply chain is more geographically diverse, with key suppliers in Europe, the United States, and other parts of Asia, Elf CFO Mandy Fields noted. This mix should help Elf mitigate tariff pressures and stabilize costs.
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