The deal would mark a shift in strategy and expand into the prestige beauty market as e.l.f. faces weak demand from mass market customers.

Model Hailey Bieber's makeup and skincare brand, Rhode, is being snapped up by Elf Beauty for about $1 billion, giving the budget cosmetic retailer access to a celebrity-endorsed product line that has become hugely popular among Gen Z and millennials.

E.L.F. Beauty acquired Mrs. Bieber’s cosmetics brand for $800 million in cash and stock upfront, with another $200 million contingent on future growth.