Shiseido seals $845m deal to buy skincare firm Drunk Elephant

Photo: Drunk Elephant's Facebook page

Shiseido Co. agreed to buy skincare brand Drunk Elephant for $845 million as the Japanese beauty company seeks to appeal to younger consumers in the U.S.

The deal for Drunk Elephant Holdings LLC won’t have a significant impact on full-year earnings, Shiseido said in a statement Tuesday. It will be financed with a combination of cash and credit, and is expected to close by the end of the year.

Shiseido is acquiring a brand beloved by hip millennial and Generation Z consumers for its nontoxic ingredients and Instagram-friendly packaging, as the Japanese company attempts to bolster its presence among younger shoppers.

The world’s largest cosmetics companies have been rapidly acquiring upstart brands in recent years as they search for the next big hit. Last year, Shiseido redesigned its eponymous makeup line to appeal to younger generations.

The Drunk Elephant deal will add to Shiseido’s “prestige” skincare portfolio, which has been a key source of growth for the company in recent years as consumers show a willingness to spend on higher-priced beauty products.

Drunk Elephant was founded in 2012 by Tiffany Masterson and is known for its products with nontoxic ingredients that make use of acids. The company is profitable and on track to have more than $100 million in sales in 2019, according to Shiseido.