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Why Estée Lauder-Too Faced Makes Sense

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Estee Lauder's purchase of Too Faced follows its acquisition of Becca Cosmetics.

Estée Lauder is on a makeup binge. Following the acquisition of Becca Cosmetics, the company has announced the purchase of Too Faced, a top-eight makeup brand with more than 7 million Instagram followers, for about $1.45 billion, based on projected 2016 sales of $260 million (70% year-over-year growth).

This is the largest acquisition in Estée Lauder's history. As we noted recently, companies are willing to pay high multiples for strategic acquisitions.

The move will help Estée Lauder capture a greater share of the U.S. color cosmetics market, which will be worth $18 billion by 2020. In addition, Too Faced will deliver market share in prestige makeup, multichannel distribution and millennial consumers.

"With Too Faced, we see terrific opportunity for additional value creation through expansion in new and existing markets both in the U.S. and internationally, as well as in travel retail globally."

And, by snapping up Too Faced, Estée Lauder is gaining a strong player in the makeup dupe space. (Other key brands in this area include ColourPop, NYX Cosmetics, Anastasia Beverly Hills, Benefit Cosmetics, Kat Von D, Smashbox and Stila.)

Too Faced’s successes include the Better Than Sex Mascara, which has sold more than 2.5 million units globally, and the Born This Way foundation.

John Demsey, executive group president, The Estée Lauder Companies Inc., will add Too Faced to the portfolio of brands that he oversees.

“Too Faced is one of the most dynamic makeup brands in the world,” said Fabrizio Freda, president and CEO of The Estée Lauder Companies. “It has tremendous growth momentum in specialty-multi and online—important, strategic and fast-growing channels. With Too Faced, we see terrific opportunity for additional value creation through expansion in new and existing markets both in the U.S. and internationally, as well as in travel retail globally. Jeremy, Jerrod, Eric and the entire Too Faced team have built an amazing and innovative brand. We look forward to working with them to continue to build on the brand’s winning spirit.”

“We are delighted to be joining forces with The Estée Lauder Companies as we continue to drive Too Faced’s dynamic growth,” said Jeremy Johnson and Jerrod Blandino, co-founders of Too Faced. “We started our careers behind the counters of the Estée Lauder brand, so this is truly a ‘homecoming’ for us. The Estée Lauder Companies appreciates our unique vision – to provide innovative, cruelty-free makeup products that give women the confidence to ‘have fun, play and dream big’—and is committed to ensuring that we retain and build on the core pillars of our brand that are so important to us and our fans. This commitment, combined with ELC’s incredible world-class resources, will help us assure the ongoing growth and success of Too Faced for many years to come.”

“The entrepreneurial spirit at the heart of The Estée Lauder Companies is evident in the remarkable success of Too Faced,” said William P. Lauder, executive chairman of The Estée Lauder Companies. “Jerrod and Jeremy started the brand with a simple, yet compelling creative concept, and transformed it into something that is truly extraordinary. We are absolutely delighted that Jeremy and Jerrod are ‘returning’ to the Company where they began their careers in beauty, and we welcome the entire Too Faced team to our family.”

"Too Faced is a terrific growth company with an impressive track record of successful product innovation and an authentic connection with its customers," said Andrew Crawford, managing director and global head of retail and consumer at General Atlantic. "We’ve enjoyed a strong partnership with Jeremy, Jerrod, Eric and the rest of the Too Faced team and believe the company’s bright future will only be enhanced as part of The Estée Lauder Companies’ portfolio."

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