In a transformative move for the beauty industry, E.l.f. Beauty announced on May 28, 2025, the acquisition of Rhode, the cosmetics and skincare brand founded by Hailey Bieber, for $1 billion. The deal, finalized in Oakland, California, merges two brands beloved by Gen Z and bolsters E.l.f.’s strategy to diversify its supply chain, reducing reliance on Chinese manufacturers. The transaction, comprising $800 million in cash and stock and a potential $200 million performance-based bonus, marks one of the largest beauty sector deals in recent years. Set to close in the second quarter of 2026, the acquisition highlights Rhode’s meteoric rise and E.l.f.’s ambition to capture a broader market.
Rhode, launched in 2022, has captivated young consumers with products like the Peptide Lip Treatment and Glazing Milk, generating $212 million in net sales for the fiscal year ending March 31, 2025. E.l.f., known for affordable cosmetics, sees Rhode as a gateway to higher-income consumers.
Hailey Bieber, who will remain founder and take on roles as chief creative and innovation officer, emphasized the synergy between the brands. A new partnership with Sephora, set to bring Rhode products to stores in the United States, Canada, and the United Kingdom starting in fall 2025, further amplifies the brand’s global potential.
Financial breakdown of the deal
The $1 billion agreement includes $600 million in cash and $200 million in E.l.f. Beauty stock, with an additional $200 million tied to Rhode’s performance over the next three years. The deal, approved by E.l.f.’s board, will be funded through committed debt financing.
Rhode, primarily a direct-to-consumer brand, achieved a valuation of roughly 3.8 times its trailing 12-month net sales. Founders and key employees will receive stock with lock-up agreements, vesting over one year.
- Payment structure: $600 million cash, $200 million in shares.
- Future bonus: Up to $200 million based on performance metrics.
- Closing timeline: Second quarter of 2026, pending regulatory approvals.
The financing reflects E.l.f.’s confidence in Rhode’s ability to expand its footprint in the prestige beauty market while maintaining competitive pricing compared to luxury brands.
Rhode’s market ascent
Since its debut, Rhode has carved a niche with a minimalist approach, focusing on essential, high-efficacy products. The brand launched with three core items—Peptide Glazing Fluid, Barrier Restore Cream, and Peptide Lip Treatment—and later expanded into makeup, including blush and lip liners, alongside viral accessories like phone cases designed to hold lip gloss.
In the past year, Rhode doubled its consumer base and became the top skincare brand in earned media value in 2024, with a 367% growth over the prior year. Its social media-driven marketing strategy has been pivotal to this success.
The Sephora partnership, announced shortly before the acquisition, marks Rhode’s shift from an online-only model to physical retail. The brand will be available in all Sephora stores across the U.S. and Canada by fall 2025, with plans to enter the U.K. market by year-end.
E.l.f. Beauty’s strategic vision
Founded in 2004, E.l.f. Beauty has emerged as one of the fastest-growing beauty companies, reporting $1.3 billion in annual sales in 2025, a 28% increase from the previous year. The Rhode acquisition, its largest to date, surpasses the $355 million purchase of Naturium in 2023.
E.l.f.’s portfolio, which includes E.l.f. Cosmetics, E.l.f. Skin, Alicia Keys’ Keys Soulcare, and Well People, gains a prestige layer with Rhode, whose products average $28 compared to E.l.f.’s entry-level $6.50 price point.
- Diverse portfolio: Encompasses Naturium, Keys Soulcare, and Well People.
- Marketing innovation: E.l.f. is known for bold campaigns, like its Super Bowl ad featuring Jennifer Coolidge.
- Global reach: The Sephora partnership strengthens E.l.f.’s international presence.
The acquisition also supports E.l.f.’s efforts to reduce reliance on Chinese suppliers, which account for 75% of its production, down from 100% in 2019. The company raised product prices by $1 to offset import tariff pressures.
Hailey Bieber’s ongoing role
Hailey Bieber, who co-founded Rhode with Michael D. Ratner and Lauren Ratner, will continue leading the brand as chief creative and innovation officer. She will also serve as a strategic advisor to E.l.f. Beauty, overseeing marketing campaigns and product development.
With nearly 55 million Instagram followers, Bieber’s influence has been central to Rhode’s success. Her hands-on approach to product formulation and marketing has differentiated the brand in a crowded market.
Rhode’s CEO, Nick Vlahos, will remain in his role, managing operations from the brand’s Los Angeles office. The existing Rhode team will stay intact, ensuring continuity in the brand’s vision.
Mergers and acquisitions landscape
The Rhode acquisition comes amid a cautious mergers and acquisitions environment in the beauty sector. Few deals have reached the $1 billion mark in recent years, as strategic buyers and investors focus on performance management amid geopolitical tensions and inflationary pressures.
Other celebrity-founded brands, such as Selena Gomez’s Rare Beauty, Makeup by Mario, and Kosas, have struggled to secure buyers. Rhode’s rapid growth and robust business model, however, made it an attractive target for E.l.f. Beauty.
- Initial negotiations: Rhode engaged JPMorgan Chase and Moelis in April 2025 to explore sale options.
- Valuation skepticism: Some doubted Rhode could fetch $1 billion, but E.l.f. exceeded expectations.
- Competitive landscape: Brands like Estée Lauder and Shiseido face financial constraints, limiting large-scale acquisitions.
Rhode’s success underscores a shift in the market, where celebrity brands must prove value beyond their founders’ fame. Its blend of effective products, strategic marketing, and selective partnerships drove its standout performance.
Retail expansion milestone
Rhode’s entry into Sephora stores is a pivotal step. The partnership, confirmed days before the acquisition, will broaden Rhode’s consumer reach in key markets.
Sephora, a leading beauty retailer, will carry Rhode’s full product line, including bestsellers and upcoming launches. The U.K. expansion is slated for late 2025, with potential for further European market entries in 2026.
The move to physical retail reflects Rhode’s evolution into an omnichannel brand, balancing online sales with in-store presence.
Products driving Rhode’s success
Rhode has gained traction with innovative, accessible products. The $18 Peptide Lip Treatment, a social media sensation, has outperformed competitors like Summer Fridays’ Lip Butter Balm in direct-to-consumer sales.
Other standouts, like Glazing Milk and Pocket Blush, have resonated for their practicality and visible results. Rhode plans to expand its hybrid makeup line, integrating skincare benefits into new products.
- Peptide Lip Treatment: Top seller, praised for intense hydration.
- Glazing Milk: Toner delivering the viral “glazed donut skin” effect.
- Pocket Blush: Compact blush designed for daily use.
- Phone cases: Viral accessory blending functionality and style.
Rhode’s promotional collaborations, such as with Krispy Kreme, have further embedded the brand in pop culture.
Beauty industry challenges
The beauty sector faces a complex landscape, with fluctuating demand and economic pressures. E.l.f. Beauty, despite its growth, reported a slowdown from its 77% sales increase in 2024, reflecting mass-market challenges.
The Rhode acquisition positions E.l.f. to compete in the prestige segment, but the company must navigate issues like import tariffs and inflation, which impact production costs and consumer prices.
Rhode, meanwhile, must maintain its relevance in a saturated market, where celebrity brands face scrutiny over longevity. The partnership with E.l.f. provides resources and scale to address these hurdles.
Future plans for the partnership
E.l.f. Beauty aims to integrate Rhode into its global strategy, leveraging its digital marketing and distribution expertise. The company plans to launch new Rhode products, adhering to the brand’s “one of everything really good” philosophy.
International expansion, starting in Europe, is a priority. E.l.f. will also explore partnerships with additional beauty retailers beyond Sephora to boost Rhode’s visibility.
The acquisition solidifies E.l.f.’s position as an industry innovator, while Rhode gains the resources to accelerate growth in a competitive market.
