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Waldencast to Buy Obagi and Milk Makeup in Three-Way $1.2 Billion Deal

Published November 17, 2021
Published November 17, 2021

Waldencast Acquisition Corp. a special purpose acquisition company, entered into a definitive simultaneous business combination agreement with Obagi and Milk Makeup.

WHO: Founded in 1988, Obagi is a leading physician-dispensed brand in the dermo-cosmetic space formulated with scientifically proven ingredients and refined with a legacy of 30 years' experience. Obagi is ranked number one by US dermatologists and plastic surgeons and is recognized for its clinical excellence, industry-leading innovation, and science-backed approach. The brand is strongly anchored in the medical space through practitioners' recommendations; its products also span the consumer and spa segment. The brand has 200+ SLUs and 80+ global patents.

Founded in 2016, Milk Makeup, known for its cultural relevance and iconic products, is a high-growth, cult-favorite beauty brand among Gen Z consumers and a leader in clean beauty that has grown organically through a diverse and inclusive community. Milk Makeup is built on the promise of clean, cool beauty that works with best-selling hero products at key retailers. The brand values of Good for You, Good for the Planet, and Good for the Community resonate strongly with its passionate community. The brand creates vegan, cruelty-free, clean formulas that are sold through retail partners including Sephora in North America, Europe, the Middle East, and Australia, and Cult Beauty and Selfridges in the UK.

The business will be run by founder Michel Brousset as Chief Executive Officer and Hind Sebti as Chief Operating Officer. Waldencast's vision is to build a global best-in-class beauty and wellness operating platform by developing, acquiring, accelerating, and scaling the next generation of conscious, purpose-driven brands. The company intends to seek brands with a direct connection to today's evolving consumers whose goals include pursuing social responsibility, inclusiveness, sustainability, and transparency. Its goal is to become the partner of choice for next-generation brands and consumers by leveraging the collective leadership and the industry-specific operating experience of its management team.

WHY: The approximately $1.2 billion three-way transaction is a first step in Waldencast's strategy to create a global best-in-class multi-brand beauty and wellness platform.

IN THEIR OWN WORDS: Michel Brousset, Waldencast founder and CEO, said: "Partnering with Obagi and Milk Makeup is a major milestone in our ambition to build a best-in-class global multi-brand beauty platform, which will be home for the next generation of high-growth, purpose-driven brands. I greatly admire Obagi and Milk Makeup, both leaders in their respective categories, and I am looking forward to working with Jaime and Tim to further accelerate the growth of their respective brands, while preserving each brand's unique business model. We believe the brands will benefit strongly from the Waldencast ecosystem, bringing operational scale, and attracting best-in-class talent and capabilities."

Jaime Castle, CEO of Obagi, said: "Waldencast's ambition to build a global best-in-class beauty and wellness company that embraces conscious, purpose-driven brands is aligned with Obagi's purpose, vision and values, making Waldencast an ideal fit. I look forward to working with Michel and the team as we continue to develop effective, science-based skin care that includes and embraces the full spectrum of beauty and self-care."

Tim Coolican, CEO of Milk Makeup, remarked: "Our community has always been the heartbeat of our company and Milk Makeup's mission is to celebrate and serve them. We found in Waldencast like-minded partners who share our values and commitment to building a global beauty movement rooted in community, self-expression, inclusion, and social purpose."

Mazdack Rassi, Milk Makeup co-founder and Chief Brand Officer, added: "We built Milk Makeup to be a movement as much as a business, and Waldencast is the perfect home for Milk Makeup to achieve its full potential. I am so grateful to our team and our community and look forward to a great future together."

Waldencast Chairman Felipe Dutra said, "The Board and I are excited about the growth opportunities that this combination can create under the outstanding leadership of Michel, Hind, Tassilo and the management teams of Obagi and Milk Makeup—who together have world-class beauty expertise with a proven track record. This transaction brings to life the Waldencast dream of building a global best-in-class beauty and wellness multi-brand platform, and I am honored to be a part of this journey."


  • Under the terms of the definitive merger agreement, the transaction is valued at a pro forma enterprise value of approximately $1.2 billion.
  • The transaction will be funded by $345 million of IPO cash proceeds (subject to any redemptions); a fully committed $333 million forward purchase agreement of which $160 million is provided by the sponsors (Waldencast Long-Term Capital LLC and Dynamo Master Fund); a fully committed $105 million PIPE priced at $10.00 per share; and $475 million of seller rollover equity. Obagi's and Milk Makeup's existing shareholders are expected to hold equity of 20.5% and 14.9% respectively (without giving effect to any redemptions) in Waldencast.
  • According to the Waldencast investor presentation, Obagi's projected net revenue for 2021 is $168 million with a 25% adjusted EBITA margin. Milk Makeup's 2021 estimated net revenue is $47 million.
  • Waldencast will be led by founder and CEO Michel Brousset. Obagi CEO Jaime Castle and Milk Makeup CEO Tim Coolican will remain responsible for their respective businesses, reporting to Brousset and working closely with Waldencast's leadership.
  • J.P. Morgan Securities LLC acted as capital markets advisor and lead financial advisor, and Credit Suisse acted as capital markets advisor and financial advisor to Waldencast. Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Waldencast. Lazard was financial advisor to Obagi, and Financo Raymond James was financial advisor to Milk Makeup. Latham & Watkins served as legal counsel to Obagi, and Goodwin Procter served as legal counsel to Milk Makeup.

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