In a deal with Bain Capital Private Equity and Bow Street LLC (referred to as the “Investor Group”), Blue Nile Inc. agreed to be taken private in an all-cash transaction valued at $500 million.
“The terms of the all-cash deal provide substantial value to Blue Nile’s stockholders,” the company said. “The Investor Group will acquire 100 percent of the outstanding shares of Blue Nile common stock for approximately $500 million.”
The online retailer said its stockholders will receive “$40.75 in cash per share, representing a premium of approximately 34 percent over Blue Nile’s closing price on Nov. 4, 2016.”
Separately, the retailer reported lower sales and earnings for the third quarter. Net sales dropped 4.4 percent to $105.1 million from $109.9 million in the same period last year as net income fell 35 percent to $1.3 million, or 11 cents per share, from $2 million or 17 cents.
Harvey Kanter, chairman, chief executive officer and president of Blue Nile, said since the company’s inception, its “guiding principle has been to provide value to its customers, suppliers and shareholders, and this transaction provides tremendous value to all.”
“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,” the ceo added.
The deal, which was unanimously approved by Blue Nile’s board, is expected to close earlier next year. Once complete, the company will become private and remain at its current headquarters in Seattle. Bank of America Merrill Lynch served as the financial adviser on the deal while Goldman Sachs & Co. is providing debt. Wilson Sonsini Goodrich & Rosati served as legal adviser to Blue Nile, and Kirkland & Ellis LLP did the same for the Investor Group.
Ryan Cotton, a managing director at Bain Capital Private Equity, described the deal as 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,” Cotton said. “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.”
Howard Shainker, managing partner at Bow Street, said Blue Nile is “a unique business with a strong platform in an industry that is rapidly evolving and migrating online.”