Budget makeup powerhouse e.l.f. Beauty has made a significant move by acquiring Hailey Bieber’s beauty brand, rhode, in a deal valued at $1 billion. Announced on Wednesday, this acquisition marks e.l.f.’s largest to date, surpassing its previous $355 million purchase of skincare brand Naturium in 2023. The acquisition signals e.l.f.'s ambition to further solidify its position in the beauty market by integrating a popular, celebrity-backed brand into its portfolio.

Rhode, founded by Hailey Bieber in the summer of 2022, was born out of her personal experiences and a desire to simplify skincare. Bieber, who mentioned her extensive travel as a model since age 17 influenced her thinking about essential carry-on products, launched Rhode (her middle name) in Los Angeles. She aimed to cut through the market noise with what she described to Forbes in 2022 as "a very edited and curated, intentional shopping process for people." This philosophy is reflected in rhode's concise product line of 10 products across skincare, color cosmetics, and accessories. The brand quickly gained traction, achieving $212 million in net sales in its last fiscal year, which ended in March. Earlier this year, rhode also announced its expansion into physical retail through Sephora stores in North America and the United Kingdom.

Hailey Bieber, who is also the wife of singer Justin Bieber and commands a significant social media presence with nearly 55 million Instagram followers, will continue to play a pivotal role in rhode's future. She will serve as rhode’s chief creative officer and head of innovation, transitioning from her current role as founder and creative director. Rhode's success is significantly attributed to this strong social media engagement and Bieber's substantial digital footprint. E.l.f. highlighted rhode's "powerful engagement model" in its earnings call, noting that fans often wait hours for rhode pop-ups and its products frequently sell out online.

E.l.f. Beauty, which dominates the skincare and makeup market for young consumers and is recognized as teens’ top cosmetic brand according to a Piper Sandler survey, sees significant potential in this acquisition. The company stated its intention to help rhode expand its retail presence and increase its global footprint. During an earnings call, e.l.f. CEO Tarang Amin specifically praised rhode's focused approach, saying, “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.”

This major acquisition comes at a challenging time for e.l.f. Beauty, as it navigates President Donald Trump’s chaotic tariff war with China. As of mid-May, about 75% of its global production came from China and is now subject to tariffs of 55%, including the tariffs put in place in 2019, as stated in its Wednesday earnings. In response to the tariffs, e.l.f. is increasing prices by $1 across its entire portfolio on August 1, affecting the majority of its products priced under $10. E.l.f. also did not issue guidance for this fiscal year because of uncertainty around tariffs. However, it is still sticking by its production model, stating 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… (We) are committed to our China team and suppliers.”

The deal for rhode consists of $800 million in cash and stock, with an additional potential payout of $200 million based on rhode's performance over the next three years. This initial component is understood to comprise $600 million in cash and $200 million in e.l.f. Beauty stock. The acquisition is expected to close later this year.