Unilever has signed an agreement to acquire the prestige skincare brand Tatcha. The terms of the deal were not disclosed but WWD reported that Unilever paid almost $500 million for the brand.  The brand was founded in 2009 by Victoria Tsai in San Francisco and it has an innovation center in Japan known as the Tatcha Institute. Tatcha creates its formulae from a foundation of green tea, rice and algae known as Hadasei-3, and said to be a combination of “anti-aging superfoods” inspired by the Japanese diet. The brand is reportedly on track to bring in $100 million in net sales in 2019.  Unilever said the brand has become a cult favorite, introducing Japanese skincare to the world. Its products have become popular at retailers such as Sephora, through a focus on natural ingredients and high-end design and packaging. The company’s products include Luminous Dewy Skin Mist, The Silk Canvas primer, The Water Cream moisturizer, and The Deep Cleanse Exfoliating Cleanser.  Vasiliki Petrou, Unilever EVP and CEO Prestige, said: “Tatcha is one of the best performing beauty brands in North America, famous for its exceptional product experience and unique combination of natural ingredients and high product efficacy.”  One of the Largest M&A Deals to Build and Expand Unilever’s Prestige Beauty Business The $500 million deal marks the largest acquisition by Unilever since it acquired Dollar Shave Club for $1 billion in 2016. The acquisition supports Unilever’s expansion of its prestige beauty segment and is in line with Unilever’s strategy of expanding its business with acquisitions. The company built its Prestige division from acquisitions, spending about €2 billion ($2.3 billion) to acquire six businesses: Dermalogica, Murad, Ren, Kate Somerville, Living Proof and Hourglass. Unilever’s Prestige division was growing at a 12% rate year to date as of early December 2018, and the company expected it to pass the €500 million ($571.8 million) mark by 2018, according to Alan Jope, President of Personal Care at the company’s 2018 Investor Event in December.. Key Insights The Tatcha acquisition represents a meaningful strengthening of Unilever’s offering in the prestige, natural beauty space, further nudging the balance of the company’s beauty and personal care offering away from midmarket toiletries. Other brand owners are similarly taking an acquisitive approach to build out their offerings in the natural and premium segment. For example, Procter & Gamble acquired First Aid Beauty for $250 million in July 2018, its second prestige beauty acquisition in 2018. And L’Oréal acquired Logocos Naturkosmetik, a manufacturer of vegan beauty products, for an undisclosed amount in late 2018. For more on acquisitions in the beauty industry, see our Sector Overview: Beauty Brands and Retailers report.