After years of speculation, Drunk Elephant has been acquired. While it is less than the billion-dollar price tag that had been floated, Shiseido’s acquisition of the brand is still one of the largest deals of the year, second only to L’Occitane’s purchase of Elemis for $900 million in January.
WHO: Drunk Elephant was founded in 2012 by Tiffany Masterson as a cross-generational brand for all skin types, and has since experienced strong growth among Gen Z and millennials. Its products use biocompatible ingredients that directly benefit the skin’s health, noted Shiseido, which highlighted Drunk Elephant’s “effective products, unique and playful brand voice, and strong community engagement.”
Shiseido Americas Corporation is a subsidiary of Tokyo-based Shiseido Company, Limited. Shiseido Americas’ portfolio of prestige beauty brands includes Shiseido, NARS, Clé de Peau Beauté, bareMinerals, Laura Mercier, and several prestige fragrance brands including Issey Miyake, Narciso Rodriguez, and Dolce & Gabbana. In 2017, Shiseido Americas acquired MATCHCo, a technology company, JWALK, a creative agency, and Giaran.
WHY: The move is the latest step in Shiseido’s push to become a bigger player with a more global footprint. The acquisition is part of Shiseido’s Vision 2020 goal, first announced in 2014 to expand the company by growing new brands, removing silos between teams, and devoting resources to e-commerce.
IN THEIR OWN WORDS: Shiseido President and CEO Masahiko Uotani said: “We are thrilled to announce the acquisition of Drunk Elephant, one of the fastest-growing prestige skincare brands in history. This transaction is squarely aligned with Shiseido’s Vision 2020 goal of accelerating growth and creating value through strategic partnerships. Drunk Elephant’s approach strongly resonates with its highly engaged and loyal consumers, who value the integrity and effectiveness of Drunk Elephant’s formulations combined with a fun, curious approach. I am confident that under Marc Rey’s leadership in the Americas and Shiseido’s global platform and unique resources, we will strongly support Drunk Elephant on its ongoing growth trajectory. I am very pleased to welcome Tiffany and the Drunk Elephant team to the Shiseido Family and together, pursue our long term mission of ‘Beauty Innovations for a Better World.’”
Marc Rey, CEO Shiseido Americas, said: “This new and incredibly exciting partnership builds on Shiseido’s significant momentum and successful track record of acquiring distinctive, best-in-class brands. Drunk Elephant is changing the way people understand and experience beauty by offering products that are effective and clean-compatible. Drunk Elephant is built on a strong brand foundation and a philosophy that fits perfectly with Shiseido’s values and skincare heritage. Our innovative and people-first cultures are well aligned, and we share an unwavering commitment to our consumers. I also believe the brand will contribute to the business performance of Shiseido Americas.”
Tiffany Masterson said: “I started this business as an industry outsider, and from the beginning, I did things a little differently. To join with a powerhouse beauty company such as Shiseido that leads the industry in innovation and global excellence is a dream come true for me and for Drunk Elephant. We share similar values, most importantly an unwavering commitment to the consumer. I chose a partner who will let the brand continue to be itself, with the same formulations and the same team.”
- Shiseido acquired a 100% stake in the Drunk Elephant business for $845 million.
- The purchase price is said to be more than eight times 2018 sales, and more than 20 times earnings before interest, taxes, depreciation, and amortization.
- According to The Moodie Davitt Report, Drunk Elephant had consolidated sales of US$75 million in the year ended 31 December 2018, with projected sales of US$125 million in 2019.
- According to Tribe Dynamics, Drunk Elephant grew its EMV 272% from 2017 to 2018. From January to August 2019, the brand collected $34.6MM EMV, a 102% EMV increase from January to August 2018. In comparison, over the same period the Tribe Dynamics’ Skincare EMV Index—a portfolio of 100 top-earning skincare brands—grew just 9%.
- In the spring of 2017, there were rumors of a sale to Estée Lauder. Ultimately the brand took investment from VMG Partners and Man Repeller’s Leandra Medine. At the time of the investment, the brand was said to have sales of between $25 million and $30 million at retail in 2016, with revenues tracking to double in 2017.
- Early on, Masterson received $300,000 seed funding from her brother-in-law, and her brother also invested an undisclosed amount and became president.
- Upon closing, Drunk Elephant will operate within Shiseido Americas.
- Founding Partner and Chief Creative Officer Tiffany Masterson will continue in her role as Chief Creative Officer and assume the additional role of President, reporting to Shiseido Americas CEO and Chief Growth Officer Marc Rey.
- The transaction was led by Shiseido Americas and the New York-based Shiseido Global M&A team, in coordination with the Shiseido Company.
- Jefferies LLC acted as a financial advisor to Shiseido Americas, and Jones Day served as Shiseido Americas’ legal counsel.
- Financo and Moelis & Company, LLC, served as Drunk Elephant’s financial advisors and Sidley Austin LLP as legal counsel.
Photo: via Business Wire