Too Faced Cosmetics Gains New Investor

Investment firm General Atlantic LLC is acquiring a majority stake in California-based makeup brand Too Faced, a fast-growing company with a nontraditional approach to high-priced cosmetics.

Terms of the transaction weren't disclosed, but a person familiar with the matter said the deal values Too Faced Cosmetics LLC at roughly $500 million. The brand's annual revenue is about $150 million and sales are growing at more than 60% a year, according to the company. The deal includes debt financing.

The company was recently put up for sale by its owner, private-equity firm Weston Presidio Capital, which has been a majority shareholder since 2012. The auction attracted interest from bidders including Esté e Lauder Cos., the person said. An Esté e spokeswoman declined to comment.

Founded in 1998, Too Faced has taken a nonconventional approach to its business. The company primarily sells its products at cosmetics retailers, such as Sephora and Ulta Beauty, which allow shoppers to serve themselves, rather than at department store makeup counters. Its cosmetics, which sell for $23 to $49 apiece, include items with quirky names, such as Better Than Sex mascara and Chocolate Bar eye shadow.

It also doesn't buy ads in magazines or broadcast media, and has grown with the help of social media, where it has a large following of loyal customers and beauty bloggers.

General Atlantic plans to expand distribution of Too Faced's products to overseas markets and online, said Andrew Crawford, a managing director at General Atlantic who oversees the firm's retail and consumer investments.

"This is one of the largest and fastest growing independent beauty brands, and we've very bullish about the prospects for the company," he said. General Atlantic's other investments in consumer-focused businesses include stakes in luxury handbag and clothing maker Tory Burch LLC, flash sales retailer Gilt Group Inc. and Alibaba Group Holding Ltd.

Retailers struggling to bring in more shoppers to their stores have been bolstering their beauty offerings. Macy's Inc. earlier this year agreed to acquire beauty and skin-care chain Bluemercury Inc. for $210 million in cash, its first acquisition in a decade.

Too Faced's co-founders, Jerrod Blandino and Jeremy Johnson, will continue to hold stakes in the company and run it as chief creative officer and chief executive officer respectively, along with its president, Eric Hohl. General Atlantic is appointing Ken Stevens, former chairman of Ulta and beauty brand Philosophy, as chairman and will have two representatives join the company's board.

Write to Serena Ng at [e-mail]

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