New York, N.Y. — E.l.f. Beauty has announced a significant acquisition, purchasing the Rhode skincare brand, co-founded by model Hailey Bieber, in a landmark deal valued at $1 billion. The acquisition underscores the growing interest in beauty brands that emphasize affordability and quality, especially in a landscape increasingly shaped by social media influencers.

Rhode has seen impressive growth, generating $212 million in net sales over the past year, which ended in March. Currently, its products are sold exclusively online, but plans are underway to launch an in-store partnership with Sephora in both North America and the U.K. by year’s end, signaling a new phase for the brand as it aims to expand its consumer reach.

Hailey Bieber, who is also the wife of pop star Justin Bieber, will take on crucial roles within the company. She is set to serve as Rhode’s chief creative officer and will lead innovation efforts while providing strategic advice to E.l.f. Beauty as the two brands merge. This integration highlights the trend of celebrity-led brands gaining traction in the competitive skincare market.

The financial breakdown of the deal reveals that E.l.f. Beauty will provide $600 million in cash along with $200 million in newly issued stock. An additional potential earnout of $200 million is tied to Rhode’s future performance over the next three years. This structure underscores E.l.f.’s confidence in Rhode’s potential for continued growth.

Following the announcement, shares of E.l.f. Beauty, which is based in Oakland, California, experienced a notable uptick, rising 12% before the trading day commenced. This market reaction indicates investor optimism regarding the strategic move and potential synergies between the two brands.

E.l.f. Beauty’s acquisition of Rhode aligns with broader industry trends, as established beauty companies increasingly seek to diversify their portfolios. The partnership not only enhances E.l.f.’s product offerings but also leverages Hailey Bieber’s substantial influence in the beauty industry, potentially drawing in her dedicated follower base.

As both companies prepare to integrate, industry analysts will be closely watching Rhode’s transition into physical retail and how E.l.f. Beauty harnesses its resources to foster further growth and innovation within the skincare sector.