Cosmetics giant Estee Lauder announced Monday it had agreed to acquire the privately held makeup brand Smashbox Beauty Cosmetics.
Analysts said trendy Smashbox, based in Los Angeles, would help bring Estee Lauder – whose brands include Bobbi Brown, La Mer, and Aveda – younger customers. Estee Lauder also said it liked Smashbox's Hollywood image (it was inspired by the needs of makeup artists working on photo shoots) and its digital and social media presence. The company – founded in 1996 by two great grandsons of legendary Hollywood makeup artist Max Factor – was among the first to post instructional videos on its website about how to achieve various makeup looks.
"We are excited to be acquiring a uniquely positioned cosmetics brand with true talent well known for engaging consumers," John Demsey, a group president at Estee Lauder, said in a statement. "Smashbox fits perfectly within our DNA."
No purchase price was given for the deal, which is expected to close in July, but Women's Wear Daily sources estimated Estee Lauder paid somewhere between $200 and $300 million. The acquisition also includes a minority stake in Smashbox Studios, the Los Angeles photo facility the Factor brothers started in 1991.
"We like the brand and its photo-studio inspired, Hollywood positioning," Lauder's president and CEO Fabrizio Freda told WWD. "Smashbox operates in a selling environment that is of big interest to us, specialty retail, where we want to continue to grow."
The acquisition will give Estee Lauder an expanded presence outside department stores, particularly in Sephora cosmetics stores and on the QVC Channel, where Smashbox ranks in the top 10 brands sold. A big chunk of Smashbox's success is seen as owed to the Factor brothers' willingness to take a chance on television sales in the late 1990s.
Smashbox will continue to operate out of its LA headquarters. BNET predicted the acquisition – if it follows the strategy of Estee Lauder's buyouts of Aveda, Stila, and MAC – "should be another textbook case of big management leaving well enough alone...The only thing different about Smashbox should be its availability — certain to grow once Lauder's resources start funding expansion."
Smashbox pulls in about $80 million in wholesale revenue and $140 million in retail sales, a source told WWD. In 2006, private-equity firm TSG Consumer Partners acquired a minority stake in the company. Smashbox is Estee Lauder's first acquisition since Leonard Lauder stepped aside in July for Freda to assume the CEO post.