E.l.f. Beauty announced Wednesday it is acquiring Hailey Bieber's skincare brand Rhode in a deal valued at $1 billion, marking the largest acquisition in the company's history as it expands its reach in the premium beauty sector. The transaction, composed of $600 million in cash and $200 million in newly issued E.l.f. Beauty stock, includes a potential $200 million earnout over the next three years based on Rhode's performance.
Rhode, which launched in 2022, generated $212 million in net sales in the 12 months ending March 31. The brand has operated exclusively online but plans to expand into retail through a partnership with Sephora in North America and the U.K. by the end of this year.
Hailey Bieber, the company's founder and current creative director, will remain with Rhode as Chief Creative Officer and Head of Innovation and will also serve as a strategic advisor to E.l.f. Beauty. "I feel invigorated, excited and more ready than ever," Bieber said on Instagram. "This is only the beginning."
E.l.f. CEO Tarang Amin praised Rhode's lean product strategy, stating, "One of the things we really like about rhode is just how tight the product assortment is. It's only 10 products across skincare, color cosmetics and accessories."
Shares of Oakland-based E.l.f. Beauty jumped 12% in pre-market trading following the announcement.
The acquisition comes amid significant cost pressures for E.l.f., which is grappling with a 55% tariff burden on goods imported from China. As of mid-May, 75% of its global production remained China-based. In response, the company announced it would raise prices by $1 across its entire product line beginning August 1. Despite these challenges, the company said in its earnings call, "We believe our unique China-based supply chain is an area of competitive advantage we've been honing for the past 21 years."
E.l.f. also declined to issue financial guidance for the upcoming fiscal year due to ongoing tariff uncertainty.
Bieber celebrated the deal on social media alongside her husband, pop star Justin Bieber. The singer reposted her announcement and followed it with personal photos, including a public show of affection and a now-deleted caption referencing a past disagreement about Hailey's career. "So baby u already know but forgive me for saying u wouldn't get a vogue cover," Justin wrote, later replacing the caption with emojis.
Speaking to Allure, Hailey Bieber said, "When you're launching a brand, you're just so focused on what's right in front of you at the time... I could have never anticipated that it would happen at this exact time." She added of the E.l.f. partnership, "Vibes matter!"
