Birchbox has found a buyer, but it won’t be QVC. Instead, hedge fund Viking Global, one of the firm’s investors, will be acquiring a majority stake in the makeup subscription box company.
As part of the deal, Viking has agreed to invest $15 million in the business, which is already tens of million of dollars in debt, according to sources speaking to Recode.
The deal will mean the other Birchbox investors — firms such as Accel Partners and First Round Capital — will essentially be losing their investments; according to reports, they will walk away from this deal with nothing. Birchbox was once valued at around $500 million and has taken in around $90 million in investor funding since 2010, when it was founded.
Birchbox has been on the market since last summer, and reports indicated the company had been in talks with a wide range of retailers, including Walmart, to see if a match could be made. The most recent potential suitor under discussion was home shopping giant QVC, which would have been able to snap up the company in a deal described in some reports as a “fire sale.” As part of the terms of that deal, Co-Founder and CEO Katia Beauchamp would not have been able to lead the company.
The latest deal with Viking means Beauchamp will remain at the helm and most of the firm’s employees will keep their jobs. As of yesterday, the company announced there would be no impending layoffs.
“As an independent company with renewed investment, we are in a position to actively pursue plans that help further our mission and fuel our ambitious goals in the U.S. and in our global markets,” Beauchamp said in a statement to Recode. “As part of that strategy, we are prioritizing product innovation, the evolution of our digital experience and scaled partnership opportunities.”
A QVC spokesperson declined to comment on the situation.
As of today, Birchbox claims 2.5 million active customers, operations in six countries and about $200 million in revenue per year. Growth has been difficult for the brand, particularly as it has faced in-vertical competition from firms like Ipsy that have utilized Birchbox’s once-innovative subscription model to steal away customers.