Good morning! Tate brothers are charged with rape, Christine Lagarde plans to finish her term as ECB president, and Hailey Bieber sells Rhode for a blockbuster $1 billion.
– Blockbuster beauty. It’s been a slow few years for beauty M&A—industry-watchers have been waiting for the sales of big brands like Glossier and Rare Beauty. Those so far haven’t materialized, but an acquisition yesterday shook up the category. E.l.f. Beauty announced its purchase of Hailey Bieber’s three-year-old Rhode for $1 billion.
Rhode launched in 2022, quickly gaining a foothold with Gen Z through its skincare, lip balms, and viral phone case. Bieber’s built-in audience of 54 million on Instagram alone (for the uninitiated, she is an incredibly popular influencer and married to pop star Justin Bieber) helped catapult the brand and its “milky” essences and glazes to the top of its category after a crowded few years for celebrity-fronted beauty.
E.l.f. noticed the speed with which Rhode grew. “Hailey has built a brand that has gone from zero dollars to $212 million in less than three years,” e.l.f. CFO Mandy Fields told my colleague Sheryl Estrada. That number is off of Rhode’s direct to consumer business; it’s slated to launch in Sephora later this year.
Both e.l.f. and Rhode are popular with Gen Z and rising beauty consumers Gen Alpha, with a pulse on culture at a relatively affordable price point. “Rhode is a brand where consumers will camp out overnight, wait 14 hours in a line for a pop-up in LA, not not just for the product, but to buy into the entire lifestyle of the brand,” e.l.f. CEO Tarang Amin told Fortune. “So that is the thing that we believe has real staying power: her instincts, her aesthetic, her vision for this brand.” He added that Rhode diversifies the portfolio for e.l.f., which is a $1.3 billion public company.
Will Rhode’s acquisition crack open the M&A door for the other beauty brands waiting in the wings? While Rhode is a less mature business than some of the other big names out there—making it easier to find a buyer—the industry was buzzing with the news yesterday and will be watching for a thaw.
Emma Hinchliffe
emma.hinchliffe@fortune.com
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