Rhode, the upstart beauty brand founded by the fashion model and entrepreneur Hailey Bieber, has been acquired by E.L.F. Beauty for $800 million in cash and stock, an eye-popping sum for a line of blushes and lip glosses that’s not yet three years old.
In an industry crowded with other celebrity-fronted beauty brands, Rhode has experienced rapid growth, which many attribute to Mrs. Bieber’s considerable influence on social media. (Mrs. Bieber, a daughter of the actor Stephen Baldwin and the wife of the pop star Justin Bieber, has 55 million followers on Instagram and 15 million on TikTok.)
“Rhode has seen exponential growth over the past three years because of deliberate decisions and best-in-class marketing and community building,” Mrs. Bieber said in a statement. “To continue to grow strategically, we need the partnership of E.L.F. Beauty to fuel innovation and global expansion.”
On top of the guaranteed $800 million payout, the E.L.F. deal, which was announced on Wednesday, includes the potential for an additional $200 million, contingent on Rhode’s growth over the next three years. Rhode, which Mrs. Bieber founded with Lauren and Michael D. Ratner, reported net sales of $212 million in the year that ended March 31.
According to Tarang Amin, the chief executive of E.L.F. Beauty, the acquisition had been in the works since October. Mr. Amin said he was eager to close on it to marry the Gen Alpha fans Mrs. Bieber has pulled in with the millennials and Gen Z consumers whom E.L.F. has traditionally relied on.
The expansion includes a partnership with Sephora that will bring Rhode products to physical stores for the first time since the brand’s debut. But even without a consistent presence in brick-and-mortar shops, Rhode had built a fan base that Mr. Amin found impressive.
“I have not seen another brand where there are communities waiting, or a pop-up event in L.A., willing to camp out overnight for 14 hours in line — not just for product, but to buy into the entire lifestyle,” Mr. Amin said in a video interview on Thursday.
Last summer, hundreds waited in line in Lower Manhattan to experience the Rhode pop-up — and possibly get a glimpse of Mrs. Bieber — in a SoHo storefront.
Mr. Amin said he admired Rhode’s ability to “engage and entertain” its customer base. Compared with E.L.F., he added, “they skew younger, but their level of engagement is what really appeals to me.”
As part of the deal, Mrs. Bieber will stay on at Rhode as the brand’s chief creative officer, and she will serve as a strategic adviser to both companies.
Korinne Wolfmeyer, a senior research analyst at the investment bank Piper Sandler who specializes in the beauty and wellness markets, believes that Mrs. Bieber’s ability to translate her connection with her fans into sales is what most aligns with E.L.F.’s strategic priorities.
“It seems like they really appreciate the way Hailey connects with her followers and her community,” Ms. Wolfmeyer said. “They view it as a similar path as E.L.F., using that consumer connection to really drive the performance.”
While celebrity brands like Kylie Jenner’s Kylie Cosmetics and Selena Gomez’s Rare Beauty have proved to be significant players in the cosmetics industry, Mrs. Bieber’s fame may not be the biggest attraction for E.L.F. Beauty. Celebrities bring a lot of reputational and trend risk, and companies are usually wary of how much they invest in their brands, Ms. Wolfmeyer said.
But unlike other beauty companies, Rhode also veers into wellness, marketing many of its products with claims that they promote skin health.
“Rhode was maybe one of the earlier movers in that category,” Ms. Wolfmeyer said. “There is obviously a lot of white-space potential and it does resonate with the younger consumers. I think that’s very appealing.”
Sandra E. Garcia is a Times reporter covering style and culture.
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