Online diamond jewellery retailer Blue Nile has entered into a definitive agreement to be acquired by a private equity investor group for nearly $500 million (£402m).
This news comes after Blue Nile’s profit slumped in the third fiscal quarter.
In an all-cash deal, Bain Capital Private Equity and Bow Street will buy all outstanding shares of Blue Nile common stock for $40.75 per (£32.83) share – roughly $500m in total – representing a premium of approximately 34% over the online diamond retailer’s closing price on November 4 2016.
“Since its inception, Blue Nile’s guiding principle has been to provide value to its customers, suppliers, and shareholders, and this transaction provides tremendous value to all,” says Blue Nile chairman, chief executive officer and president Harvey Kanter. “Blue Nile will continue its innovative drive that has disrupted the diamond industry and made us the smartest, easiest, and most pressure-free way for consumers to buy a diamond.”
Blue Nile’s Board of Directors unanimously approved the deal and recommended that stockholders vote their shares in favour of the transaction. Blue Nile will become a privately-held company and continue to be headquartered in Seattle, WA. Closing of the deal is subject to customary closing conditions, including the approval of Blue Nile’s stockholders and required regulatory approvals. There are no financing conditions associated with the proposed acquisition.
The transaction is expected to close in the first calendar quarter of 2017. Under the terms of the merger agreement, Blue Nile may solicit alternative acquisition proposals from third parties during a 30-day “go-shop” period, following the date of execution of the merger agreement.
Bain Capital Private Equity managing director Ryan Cotton comments: “This is an opportunity to acquire a true disruptor in a fundamentally attractive and growing segment of the diamond industry. Blue Nile provides a clearly superior consumer value proposition and offers a convenient delivery model that enables choice and selection in a no-pressure environment. We believe the company will continue to grow as educated consumers continue to seek easy and convenient shopping experiences that deliver transparent pricing and enhanced value.”
“Blue Nile is a unique business with a strong platform in an industry that is rapidly evolving and migrating online,” adds Howard Shainker, managing partner at Bow Street. “We are excited to work alongside Blue Nile management and Bain Capital to execute on the Company’s strategy.”
BofA Merrill Lynch is serving as exclusive financial advisor to Blue Nile, and Wilson Sonsini Goodrich & Rosati is serving as its legal advisor. Goldman Sachs & Co is providing debt for the transaction, and Kirkland & Ellis LLP is serving as legal advisor to the Investor Group.