What Elf Beauty's $1 billion acquisition of Rhode Will Mean for the Future of Celebrity Beauty Brands

Just weeks after news broke in April that Rhode had enlisted banking giants JPMorgan Chase and Moelis to investigate strategic options, including a possible sale, the deal was revealed today and is still awaiting regulatory approval. It appears that the upstart company, which is well-known for its glow-inducing ingredients and minimalist look, has discovered its next phase.

"This was a match, not just a deal."

In an open reflection on the emotional burden of selling a brand she created from the ground up, Hailey Bieber told Vogue, "Finding a home for Rhode was a really difficult process." She added, "But I could tell they had such a strong feeling of community as soon as I met the Elf Beauty crew." The term "community" is more than just Bieber's marketing jargon. It is fundamental to the DNA of her brand.

Bieber was intrigued by Elf's unconventional and customer-focused strategy rather than picking from a "table of suits," as she described it. Elf Beauty, which is well-known for being inclusive, creatively disruptive, and technologically native, felt more like a community than a corporation.

"Elf Beauty's offer felt more like a collaboration, although I could have gone corporate," she continued.

Hailey is just getting started and is not going anywhere.

In the new arrangement, Bieber will continue to be the founder of Rhode but assume a more expansive position as Head of Innovation and Chief Creative Officer. In addition to continuing to lead the brand's marketing strategy, product development, and creative direction, she will also assume a strategic consulting role for Elf Beauty's larger portfolio as well as Rhode.

She remarked, "[This role] broadens my imprint in beauty in a genuine, worldwide sense." "Being only a name on a bottle is not what I desire." I want to influence the future generation's perception of beauty.

The Reason Behind Elf Beauty's $1 Billion Bet

Tarang Amin, the CEO of Elf Beauty, views the merger as a marriage of missions rather than merely a clever commercial move. He asserted that Hailey is more than just a famous person; she is a purposeful creator with keen intuition. "With just ten goods and a direct-to-consumer business approach, she has taken Rhode from $0 to $212 million in net sales in less than three years."

That is not how beauty often develops. Rocket fuel, that is.

Now that Rhode is in its orbit, Elf Beauty expands its galaxy of purpose-driven brands by adding another formidable force. The portfolio of the group already consists of:

Naturium (purchased in 2023 for $355 million),

Alicia Keys' Keys Soulcare, which was introduced in 2020,

& Well People, a clean makeup company that was purchased in 2020 for $27 million.

How the Deal Appears on Paper

The $1 billion deal is made up of:

800 million dollars in stock and cash, and

a $200 million earn-out that is contingent on Rhode's performance during the following three years.

This hybrid structure guarantees the brand has access to the scale and resources required to grow internationally while enabling Bieber and her team to have a strong financial and creative stake in Rhode's future.

Implications for the Beauty Sector

In addition to being a victory for Hailey Bieber, Rhode's sale is a strong testament to the viability of the celebrity-founder-as-CEO model when executed with honesty and purpose. Rhode has shown to be agile, successful, and lucrative, based on close community interaction and real product efficacy, in contrast to many celebrity brands that are criticized for being vanity ventures.

And now that Elf Beauty is on its side, Rhode is ready to transform from a niche brand into a major player in the global beauty industry.

It marks a change for the industry: transactions now involve more than just market share of shelf space. They have to do with story, ethos, and alignment.

Conclusion: Not Just a Billion-Dollar Makeover

Bieber and Rhode have prospered by providing honesty, simplicity, and a distinct visual vision in an era where customers can quickly spot inauthenticity. Rhode might soon grow beyond a brand because of Elf Beauty's operational strength and global presence. It might turn into a blueprint.

This agreement will probably be examined—and imitated—for years to come as beauty continues to conflate the roles of creator, star, and CEO.