Waldencast Acquisition Corp. (NASDAQ: WALD) today announced details of a merger with vegan makeup brand, Milk Makeup, and specialist skincare startup Obagi. Waldencast, a special purpose acquisition company (SPAC) set up by two former L’Oreal executives, will primarily fund the deal through $345 million that was raised through its IPO.
Founder and CEO Michel Brousset was buoyant in the accompanying press release, where he effused that “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.” Now, let’s take a closer look at the deal.
Why does this matter to investors?
Following completion of this deal, Waldencast will be valued at approximately $1.2 billion. With a commitment to building a “best-in-class beauty and wellness operating platform,” this deal certainly puts the company amongst some of the bigger players in the market. Skincare currently makes up the largest section of the cosmetics industry, accounting for roughly 35% of the entire market share. With this in mind, the acquisition of Obagi has the potential to allow Waldencast to really grow into this space.
Obagi is a scientifically backed, skincare brand with over 30 years of experience in the industry. When asked about the merger, Obagi CEO Jaime Castle explained that Waldencast’s ambitions are “aligned with Obagi’s purpose, vision, and values, making Waldencast an ideal fit.” The merger provides the skincare brand the opportunity to scale at a much faster pace and keen investors will be undoubtedly interested in its potential success.
Similarly, Milk Makeup will look to benefit from the increased capital now available to its operations. The makeup brand prides itself on its values of self-expression and inclusion and currently offers over 300 products through its online platform. As co-founder and Chief Brand Officer Mazdack Rassi put it, “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.”
So should I buy Waldencast stock?
Waldencast certainly offers high growth potential in an extremely lucrative market. With the concept of ethical investing at an all-time high, the acquisition of sustainable and eco-conscious companies such as these will be more than welcome. The company also boasts experienced leadership with vast insider knowledge of the cosmetics industry.
One thing to keep in mind however is that much will depend on the next few quarters to determine the company’s overall viability. Investors might be better off waiting to see some quarterly earnings reports before making the decision to invest.
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Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.