Beauty Industry Bombshell: e.l.f. Beauty to Acquire Hailey Bieber's rhode for Up to $1 Billion

In a seismic shift that sent ripples through the beauty industry yesterday, e.l.f. Beauty (NYSE: ELF) announced plans to acquire celebrity entrepreneur Hailey Bieber's skincare brand rhode in a deal valued at up to $1 billion. The acquisition, revealed on May 28, 2025, represents one of the largest beauty deals of the year and signals e.l.f.'s aggressive expansion strategy in the premium skincare segment.

The transaction comes as beauty conglomerates race to capture market share in the rapidly evolving beauty landscape, where celebrity-founded brands have demonstrated extraordinary growth trajectories and consumer loyalty. Industry analysts are already characterizing the deal as transformative for e.l.f., potentially catapulting the traditionally value-focused cosmetics company into new market segments and consumer demographics.

"This acquisition represents a strategic milestone in e.l.f.'s evolution," said one industry insider who requested anonymity to speak freely about the deal. "They're not just buying a brand; they're buying cultural relevance and entry into the premium skincare category that has proven remarkably resilient even in uncertain economic times."

Deal Structure: Breaking Down the Billion

The acquisition's financial architecture reveals e.l.f.'s confidence in rhode's future performance. According to details released by the companies, the deal includes an $800 million upfront payment, with $600 million in cash financed through debt and $200 million in e.l.f. equity shares.

The remaining $200 million represents a potential earnout consideration contingent upon rhode meeting specific performance targets over a three-year period following the acquisition's close. These targets are reportedly tied to revenue growth and market share expansion, reflecting e.l.f.'s expectations for rhode's continued upward trajectory.

Financial documents indicate that rhode generated approximately $215 million in net sales for the last twelve months ending March 31, 2025. This places the acquisition multiple at roughly 4.6 times current sales—a premium valuation that underscores both rhode's growth potential and the competitive landscape for acquiring celebrity-backed beauty brands.

The transaction is expected to close in the second quarter of fiscal year 2026, subject to customary regulatory approvals and closing conditions.

Strategic Rationale: Beyond the Balance Sheet

For e.l.f. Beauty, which has built its reputation on affordable, cruelty-free cosmetics, the acquisition represents a significant pivot toward the premium skincare market. rhode, launched by Bieber in June 2022, has quickly established itself as a formidable player in the skincare space, with its "glazed donut" aesthetic and minimalist product line resonating strongly with Gen Z and millennial consumers.

Industry analysts point to several strategic advantages driving the acquisition:

Brand Diversification: The deal allows e.l.f. to expand beyond its core value proposition into higher-margin premium skincare products without diluting its existing brand identity.

Demographic Expansion: rhode brings access to a coveted consumer segment that may have previously viewed e.l.f. as primarily a mass-market brand.

Digital-First Distribution: rhode's strong direct-to-consumer presence complements e.l.f.'s omnichannel strategy, potentially accelerating the company's digital transformation.

Celebrity Influence: Hailey Bieber's continued involvement (she will reportedly maintain a significant role in the brand) provides e.l.f. with cultural currency and influence that would be difficult to develop organically.

"This isn't just about acquiring revenue streams," explained beauty industry consultant Maria Vasquez. "It's about acquiring innovation capabilities, consumer insights, and cultural relevance that can benefit the entire e.l.f. portfolio. The rhode acquisition gives them immediate credibility in premium skincare."

rhode's Meteoric Rise: From Celebrity Launch to Beauty Powerhouse

The valuation reflects rhode's extraordinary growth since its launch less than three years ago. Founded by Hailey Bieber in 2022, the brand quickly distinguished itself in the crowded celebrity beauty space through a tightly curated product lineup focused on skincare essentials.

Unlike many celebrity beauty ventures that launch with extensive product ranges, rhode debuted with just three products: a serum, moisturizer, and lip treatment. This focused approach, combined with Bieber's authentic social media presence and the brand's distinctive aesthetic, helped rhode achieve cult status almost immediately.

By March 2025, rhode had expanded to a still-modest eight products, maintaining its minimalist philosophy while generating an impressive $215 million in annual sales. This translates to approximately $27 million in revenue per product—an extraordinary efficiency ratio that likely attracted e.l.f.'s attention.

"What Hailey built with rhode is remarkable," said beauty industry analyst Jennifer Kwan. "Many celebrity brands follow a predictable trajectory of initial hype followed by declining interest. rhode has defied that pattern, showing consistent growth and genuine consumer loyalty. The products aren't just selling because of Hailey's name—they're delivering results that keep customers coming back."

The brand's success has been attributed to several factors, including Bieber's hands-on involvement in product development, strategic limited-edition releases that create scarcity, and a social media strategy that blends aspirational content with educational skincare information.

e.l.f.'s Acquisition Strategy: Building a Beauty Portfolio

The rhode acquisition continues e.l.f. Beauty's strategic expansion beyond its original value-focused cosmetics line. In recent years, the company has demonstrated a pattern of strategic acquisitions to diversify its brand portfolio and reach new consumer segments.

Most notably, e.l.f. acquired skincare brand Naturium in a previous transaction, signaling the company's ambitions in the skincare category. The rhode acquisition represents a significant escalation of this strategy, both in terms of financial commitment and brand positioning.

"e.l.f. has been methodically building a multi-brand portfolio that can address different price points and consumer needs," explained retail analyst Michael Chen. "They started with value cosmetics, expanded into accessible skincare with Naturium, and now they're moving into premium skincare with rhode. It's a textbook example of strategic portfolio development."

The company's acquisition approach appears to target brands with complementary rather than overlapping positioning, allowing e.l.f. to maintain distinct brand identities while leveraging shared infrastructure and expertise.

Operational Integration: Challenges and Opportunities

While the strategic rationale for the acquisition is compelling, the operational integration presents both challenges and opportunities. According to sources familiar with both companies, e.l.f. plans to maintain rhode's separate brand identity and team structure while integrating back-office functions and supply chain operations.

One potential challenge involves production sourcing. e.l.f. has historically relied heavily on manufacturing partners in China, while rhode has emphasized its U.S.-based production. This divergence in supply chain strategy could present integration challenges, particularly in light of ongoing tariff uncertainties affecting Chinese imports.

"The production sourcing question is significant," noted supply chain expert David Rodriguez. "e.l.f. has built its business model around efficient overseas production, while rhode's premium positioning partly relies on its made-in-America story. Reconciling these approaches without compromising either brand's value proposition will require careful navigation."

Another integration consideration involves channel strategy. While e.l.f. has successfully expanded from e-commerce into retail partnerships with major chains like Target and Ulta Beauty, rhode has maintained a primarily direct-to-consumer approach with limited retail distribution. How e.l.f. plans to evolve rhode's distribution strategy without diluting its exclusive brand positioning remains to be seen.

Market Reaction and Industry Implications

The market's initial reaction to the acquisition announcement has been cautiously positive. e.l.f. Beauty's stock experienced modest gains in after-hours trading following the announcement, suggesting investors see strategic merit in the deal despite its premium valuation.

Industry observers note that the transaction reflects broader trends reshaping the beauty landscape, including:

The Rising Value of Celebrity Brands: The $1 billion valuation for a three-year-old brand underscores the extraordinary value creation potential of well-executed celebrity beauty ventures.

Skincare's Continued Dominance: The premium placed on rhode reflects the continued strength of skincare as a category, even as color cosmetics have experienced more volatile performance.

Consolidation Pressure: The acquisition may accelerate consolidation in the beauty industry as mid-sized players seek to build scale to compete with beauty conglomerates.

Digital-First Integration: rhode's success as a primarily digital brand highlights the importance of direct consumer relationships in building beauty brands.

"This deal will likely trigger a reassessment of valuation metrics across the industry," predicted investment banker Sarah Goldstein, who specializes in beauty and consumer goods transactions. "When a three-year-old brand commands this kind of multiple, it forces everyone to reconsider what constitutes a fair valuation for high-growth beauty assets."

Leadership and Brand Continuity

According to the announcement, Hailey Bieber will maintain a significant role in the brand following the acquisition, continuing as the face of rhode and participating in product development and creative direction. This arrangement mirrors successful precedents in beauty acquisitions where founder involvement has proven crucial to maintaining brand authenticity and consumer trust.

"Founder retention is often the difference between a successful beauty acquisition and a failed one," explained brand strategist Thomas Wright. "When consumers are buying into a founder's vision and aesthetic, maintaining that authentic connection is essential. The fact that Hailey will remain involved suggests e.l.f. understands this dynamic."

The companies have not disclosed specific details about the integration of rhode's existing executive team, though industry sources suggest that key leadership will remain in place through a transition period, with potential earn-out incentives tied to continued involvement.

Future Growth Trajectory and Expansion Opportunities

The acquisition's success will ultimately be judged by rhode's performance under e.l.f.'s ownership. The earnout structure, with up to $200 million contingent on meeting performance targets over three years, provides insight into e.l.f.'s growth expectations for the brand.

Several potential expansion vectors could drive rhode's growth post-acquisition:

Geographic Expansion: While rhode has established a strong presence in North America, international markets represent significant untapped potential. e.l.f.'s existing global infrastructure could accelerate rhode's international rollout.

Product Category Extension: rhode's current focused product lineup leaves room for thoughtful expansion into adjacent categories while maintaining the brand's minimalist ethos.

Retail Distribution: Selective expansion of rhode's retail presence could drive growth while preserving the brand's premium positioning.

Cross-Brand Innovation: Technologies and formulations developed for rhode could potentially inform innovation across e.l.f.'s brand portfolio.

"The challenge will be growing rhode without diluting what makes it special," cautioned beauty industry veteran Patricia Alvarez. "The temptation with any successful acquisition is to rapidly scale by extending into new categories and channels. But rhode's value is partly in its curated, focused approach. Maintaining that discipline while driving growth will require restraint."

The Broader Context: Beauty Industry Transformation

The e.l.f.-rhode deal occurs against a backdrop of significant transformation in the beauty industry. Traditional barriers to entry have eroded, allowing digitally-native, founder-led brands to rapidly capture market share from established players. Simultaneously, changing consumer preferences—particularly emphasis on transparent formulations, sustainable practices, and authentic brand stories—have reshaped competitive dynamics.

This environment has triggered a wave of acquisitions as larger beauty companies seek to acquire innovation capabilities and cultural relevance through strategic purchases. Recent years have seen Estée Lauder Companies acquire Deciem (parent company of The Ordinary), Shiseido purchase clean skincare brand Drunk Elephant, and Unilever acquire prestige skincare brand Tatcha, among numerous other transactions.

"What we're witnessing is a fundamental reconfiguration of the beauty landscape," explained industry analyst Rebecca Torres. "Legacy companies recognize that building culturally relevant brands from scratch has become increasingly difficult. Acquisition has become the preferred strategy for staying relevant with younger consumers who prioritize authenticity and innovation over heritage."

The e.l.f.-rhode transaction stands out in this context not only for its size but also because it represents a relatively young strategic acquirer (e.l.f. itself was founded in 2004) purchasing an even younger brand—a departure from the typical pattern of legacy conglomerates acquiring digital upstarts.

Looking Ahead: Implications and Expectations

As the beauty industry digests this significant transaction, several questions loom large:

Will e.l.f. maintain rhode's premium positioning and selective distribution, or will commercial pressures drive broader availability that could potentially dilute the brand's exclusivity?

How will competitors respond to e.l.f.'s increasingly diversified portfolio strategy? Might we see accelerated acquisition activity as other mid-sized beauty companies seek to build comparable scale?

Can the combined entity leverage synergies without compromising the distinct identity and consumer base of each brand?

Will Hailey Bieber's continued involvement translate to sustained consumer engagement, or will the brand need to evolve beyond its founder's personal brand over time?

"The beauty industry is watching this deal closely," concluded beauty marketing consultant Elena Rodriguez. "If e.l.f. can successfully integrate rhode while preserving what makes it special, they'll have created a playbook for how mid-sized beauty companies can compete with the industry giants. If they stumble, it will reinforce the challenges of managing multi-brand portfolios across different price points and consumer segments."

As the acquisition moves toward its expected close in Q2 FY2026, both companies face the delicate task of planning integration while maintaining the business momentum that made the deal attractive in the first place. For e.l.f. Beauty, the billion-dollar question remains: Can they preserve rhode's magic while leveraging their operational expertise to accelerate its growth?

The answer will shape not just these companies' futures but potentially the next chapter in beauty industry consolidation.