Could The Estée Lauder Cos. Inc. be joining the chase for Becca Cosmetics?
Multiple sources said the beauty giant is looking over the cosmetics brand, which this past summer was near to selling itself to Castanea Partners and Main Post Partners for close to $200 million. But that deal was never finalized, and the exclusivity agreement expired, leaving space for other interested parties to join the fray.
A spokeswoman for Lauder said the company does not comment on rumors, but several industry sources confirmed the firm is once again eyeing Becca after having previously looked the brand over before Castanea and Main Post stepped up with their bid.
To nix the private equity deal, a new player would not only need to pony up meaningfully more in terms of purchase price, but also fork over a breakup fee, according to industry sources. Lauder’s interest may have been reignited after watching competitor L’Oreal pay $1.2 billion for IT Cosmetics back in July, some sources speculated.
Whoever ends up with the company is buying a business on track to do $75 million in net sales this year, up from $40 million in 2015, according to industry sources, but down from a previously source-projected $80 million. Those numbers are the result of a five-year-long turnaround implemented by chief executive officer Bob DeBaker and the rest of the management team at Becca, including chief financial officer and chief operating officer Jim McPherson, which came on board and chopped stockkeeping units while refocusing the business on the complexion category, which had long resonated with consumers for its multicultural shade range.
While that restructuring process started years ago, Becca really landed back on the beauty map in 2015 when it teamed with beauty vlogger and social media influencer Jaclyn Hill for a highlighter product called Champagne Pop, which sold out quickly. The duo teamed up again in 2016 for an entire collection, Becca x Jaclyn Hill, which started with a face palette, crème and liquid iterations of Champagne Pop and an eye shadow palette (the eye shadow palette was canceled before it fully launched reportedly because of customer complaints).
Initially, 20,000 face palette units sold out in less than an hour when a Sephora mobile app-based flash sale was revealed at a cocktail party celebrating the collaboration, generating about $1 million, sources said at the time. In its first day of online sales, the Becca x Jaclyn Hill collection did about $3.5 million in its first five hours, according to sources.
If Lauder were to step in and buy the company, which sources indicated is not yet a sure thing, it would be the company’s first color cosmetics deal since Smashbox in 2010. Becca also has distribution through specialty retail with Sephora and Ulta Beauty, which is an area of interest to Lauder. Recently, the beauty group added more products to J.C. Penney’s-based Sephora outposts and launched the Estée Lauder brand with Ulta online and in 30 doors.
Color cosmetics is a fast-growing area in prestige beauty, gaining 13 percent in 2015, compared with 7 percent for the prestige category as a whole, according to numbers from the NPD Group. Other recent color cosmetics acquisitions include L’Oreal’s deal for IT Cosmetics and Shiseido’s acquisition of Laura Mercier.