Axios Pro Exclusive Content

Beauty group Waldencast readies for acquisition streak

Kimberly Chin
Aug 9, 2022
Illustration of an eyeliner palette made out of a hundred dollar bill
Illustration: Sarah Grillo/Axios

Beauty and wellness group Waldencast PLC is priming for a streak of acquisitions following its public market debut via a SPAC combination, CEO Michel Brousset tells Axios.

Why it matters: The beauty segment attracted around $2.94 billion from venture funds last year, and while investment has slowed this year, PitchBook says the sector has VC attention as startups embrace technology and social media.

Catch up fast: The company formed last month when Obagi Skincare, a physician-dispensed line, and Milk Makeup, a clean makeup brand, combined with Waldencast Acquisition Corp.

What's next: Waldencast will target at least one buy per year, says Brousset, who was formerly the CEO of L’Oréal UK and an executive at Procter & Gamble.

  • Ideal targets are “already profitable, already cash-generating, but that will benefit from participating for scale and expansion in our platform,” Brousset says.
  • Waldencast seeks sustainable, inclusive and socially responsible brands, with hopes to add multiple makeup and skin care brands to the fold.
  • Waldencast could double down on the physician-dispensed channel, as well as acquire into an adjacent beauty category like hair care, fragrances and body.

By the numbers: Waldencast isn’t highly levered and will finance transactions through a combination of cash and equity mostly, though Brousset says it has some flexibility with financing.

How it works: Waldencast wants to remove the heavy infrastructure it takes to operate a brand and build the company in a way that is “fit for the 21st century,” Brousset says.

  • Waldencast will help brands grow with open development for innovation, third-party manufacturing and logistics, and cloud-based systems — while allowing them to maintain independence.
  • “Beauty is a business of trends,” he says, and successful brands have the ability to quickly respond to trends.

What they’re saying: Access to public markets gives Waldencast "the public currency to be able to provide an option to those brand founders and brand companies to participate in the upside of the business,” when striking deals, Brousset says.

  • “What we want to do is have multiple brands at play in different segments to allow us to deliver consistent results over time,” he says.

State of play: Beauty is an acquisitive industry, Brousset says, mentioning big companies like L’Oréal and Estée Lauder that have acquired scores of brands.

  • But, “it's not a winner takes all market,” he says, noting a fragmented and growing space.
  • It becomes “less about gaining market share and more about connecting with consumers in authentic meaningful ways,” he says.

The bottom line: The vision for the company is to become a house of “best-in-class” brands with a strong affinity to consumers and communities that can provide superior returns, Brousset says.

  • After all, beauty “is a business of desire, not just a business of need,” he adds.
Go deeper