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Is Walmart Thinking About Acquiring Birchbox?

On Wednesday, Recode reported that brick-and-mortar retail giant Walmart WMT is in talks to acquire online cosmetics startup Birchbox, continuing the company’s quest to build an impressive digital brand portfolio to take on Amazon.com AMZN.

Talks reportedly took place between Marc Lore, Walmart’s U.S. e-commerce chief, and Katia Beauchamp, Birchbox CEO and co-founder. However, it’s not clear how far along these acquisition discussions are, or if a deal will be the end result, said Recode.

If Walmart were to end up buying Birchbox, it would mark the retailer’s fifth e-commerce acquisition since last August, including Jet.com, upscale men’s fashion retailer Bonobos, and vintage-focused retailer Modcloth.

Founded in 2010, Birchbox is a subscription beauty service that sends its members sample sizes in order to try and learn about different beauty products. The initial goal is to pay $10 a month for these curated boxes, and customers will hopefully go on to make a full-priced purchase. The company also offers its services to men, and launched BirchboxMan in 2012 that ships grooming and lifestyle products.

According to Recode, Birchbox generates about $200 million in annual sales, but the company had been prioritizing growth over profitability, a similar strategy among e-commerce startups. But because of this, Birchbox went through two rounds of layoffs and eventually received $15 million from current investors in 2016 that allowed the company to stay afloat.

To date, the company has raised over $80 million from investors since its launch, notes Recode, in addition to previously undisclosed venture debt that is coming due early next year. And sources are saying that Birchbox has many offers on the table to restructure it.

“Birchbox’s executive team led by Beauchamp believes the company’s move toward profitability, coupled with the debt restructuring, gives it a good shot at remaining independent and potentially raising more capital,” writes Recode, though the tech news site’s sources believe that a sale is more likely.

Both Birchbox and Walmart declined to comment. Shares of Walmart are currently up about 1% to $81.90 per share in afternoon trading.

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