What everyone is getting WRONG about e.l.f. buying rhode

Summary

This video clarifies common misconceptions surrounding ELF's acquisition of Road. It discusses how ELF Cosmetics and ELF Beauty differ, explaining the company's previous acquisitions, including Well People and Ntorium, as well as its relationship with the celebrity-founded Road. The deal, valued at $1 billion, includes cash, shares, and potential earnouts. The video addresses the rumors that Haley Bieber is now a billionaire, her continued role with Road, and the possible impact on Road's product pricing, brand identity, and future launches. It also explores ELF's expansion into entertainment and media, adding another layer to the acquisition story.

Takeaways

• 😀 E.L.F. Cosmetics is different from E.L.F. Beauty; the former is the drugstore beauty brand, while the latter is the parent company overseeing multiple brands.
• 😀 E.L.F. Beauty has previously acquired other brands, such as Well People in 2020 and Ntorium in 2023, before acquiring Road in 2024.
• 😀 The acquisition of Road by E.L.F. was a $1 billion deal, but the breakdown includes $600 million in cash, $200 million in shares, and up to $200 million based on future sales.
• 😀 Road's acquisition by E.L.F. is one of the largest beauty acquisitions, though not the highest in history—previous deals like Too Faced and IT Cosmetics sold for more.
• 😀 Despite the $1 billion deal, this acquisition did not make Haley Bieber a billionaire, as she shared the proceeds with co-founders and investors.
• 😀 Haley Bieber is still involved with Road, taking on the role of Chief Brand Officer and Head of Innovation.
• 😀 E.L.F. acquiring Road does not automatically mean changes to Road’s pricing. E.L.F. itself has raised prices recently due to inflation and tariffs.
• 😀 Road's product strategy has focused on a few, high-quality products, and while the brand might launch more products under E.L.F., it will likely maintain its current identity.
• 😀 E.L.F. Beauty has expanded into entertainment through its Elf Made division, potentially bringing further synergy between E.L.F. and Road, especially with media projects from OBB Media.
• 😀 The price increase for E.L.F. was part of an ongoing strategy to balance rising operational costs while continuing to grow internationally and gain market share.

Q & A

What is the difference between E.L.F. Cosmetics and E.L.F. Beauty?

E.L.F. Cosmetics is the affordable, drugstore beauty brand known for its low prices, while E.L.F. Beauty is the parent company that owns E.L.F. Cosmetics and other brands like Ntorium, Well People, and Keys Soulcare.

How did E.L.F. Cosmetics start, and who were its founders?

E.L.F. Cosmetics was founded in 2004 by Scott Vincent Borba, a celebrity esthetician, and Joseph Shama, a recent NYU graduate. They aimed to create an affordable and accessible beauty brand.

What is the significance of E.L.F. acquiring Road?

E.L.F.'s acquisition of Road is significant because it is their largest acquisition to date, signaling the company's expansion and strategy to grow its portfolio of brands. Road is known for its rapid success since its launch.

How much did E.L.F. pay for Road, and how is this deal structured?

E.L.F. paid $1 billion for Road, broken down as $600 million in cash, $200 million in shares, and an additional $200 million contingent on Road's sales performance over three years.

Was $1 billion the highest beauty acquisition deal?

No, while the $1 billion acquisition is significant, it is not the highest in beauty industry history. Deals like the acquisition of Too Faced by Estée Lauder in 2016 ($1.45 billion) and L'Oréal's $2.5 billion acquisition of Aesop in 2023 are higher.

Is Hailey Bieber a billionaire now after Road’s acquisition?

No, Hailey Bieber is not a billionaire because of the acquisition. While she will benefit from the deal, the sum is divided among other investors and equity holders of Road.

Will Hailey Bieber still be involved with Road after the acquisition?

Yes, Hailey Bieber will remain with Road as the Chief Brand Officer and Head of Innovation, though the exact extent of her involvement is unclear.

Will Road’s prices change after E.L.F. acquires it?

It is unlikely that Road's prices will decrease. Given E.L.F.'s own price increases due to tariffs and inflation, Road's prices may remain the same or possibly increase.

What does E.L.F. plan to do with Road's brand identity?

E.L.F. has stated that they intend to preserve Road's brand identity, focusing on nurturing the founder's vision without making drastic changes, although it's uncertain how much this will hold in practice.

What role does Michael D. Ratner play in the E.L.F.-Road deal?

Michael D. Ratner, a co-founder of Road and owner of the media company OBB Media, will likely continue his involvement with Road, possibly collaborating with E.L.F.'s entertainment division, Elf Made, on future media projects.