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BLOOMBERG
Cosmetics-maker Elf Beauty Inc has agreed to acquire drugstore skincare brand Naturium for $355 million in cash and stock.
The deal is expected to double Oakland, California-based Elf’s share of retail sales in skincare to about 18%, according to a statement.
“Elf SKIN is one of the fastest growing skin care brands, and Naturium joining Elf Beauty presents a unique opportunity to significantly accelerate the potential we see in skin care,” Tarang Amin, Elf Beauty’s chairman and chief executive officer, said in the statement.
Elf and other mass-market brands have done well as consumers start to spend more on makeup in the post-pandemic era but remain eager for bargains amid high inflation. The company’s sales rose 76% in the most recent quarter to $216.3 million. Elf is forecasting net sales of $792 million to $802 million in its current fiscal year.
Its shares have more than doubled this year. They closed up 1.6% to $122.63 in New York trading, giving the company a market value of about $6.7 billion. Elf, which stands for eye, lip and face, has paired its low prices — most items are about $6 or less — with a pledge that its products are clean and vegan without animal testing. That’s helped the brand win over Gen Z consumers. It has targeted expansion in retailers such as Walmart Inc and Ulta Beauty Inc after it closed its own stores in 2019.
Naturium also focuses on “cruelty free” products that don’t contain paraben, gluten or synthetic fragrances. Elf expects Naturium to contribute roughly $48 million in net sales, about $9 million in adjusted earnings before interest, taxes, depreciation, and amortisation, and some $0.04 in adjusted EPS on a fully diluted basis in fiscal 2024.