Seattle-based online diamond seller Blue Nile announced today that it has agreed to be acquired for $500 million by Bain Capital Private Equity and Bow Street LLC.
The all-cash deal will price Blue Nile’s stock at $40.75, which is a 34 percent premium over the company’s closing price on Nov. 4. Blue Nile will keep its Seattle headquarters and become a privately-held company. The deal is expected to close in the first quarter of next year.
Founded in 1999, Blue Nile went public in 2004 at $20.50 per share. The company’s shares, which neared $100 in 2007, had been down about 15 percent during the past year but shot up more than 30 percent today after the acquisition announcement.
“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,” Blue Nile Chairman and CEO Harvey Kanter said in a statement. “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 also today reported its third quarter financial results — net sales came in at $105 million, down 4 percent from the year-ago quarter, while diluted earnings per share was at $0.11, down from $0.17 last year. The revenue slightly missed analyst expectations, while earnings were just about what Wall Street expected.
Blue Nile posted net sales of $480 million in 2015, up 1.4 percent from the previous year. Shares fell more than 20 percent this past February after the company missed on earnings expectations.
Blue Nile this year began opening brick-and-mortar locations as it aims to offer customers the convenience of internet shopping while providing physical storefronts where precious stones can be seen and touched.
“This is an opportunity to acquire a true disruptor in a fundamentally attractive and growing segment of the diamond industry,” Ryan Cotton, a managing director at Bain Capital Private Equity, said in a statement. “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’s pending sale comes about a year after another long-standing Seattle tech company, Zulily, was acquired by QVC. The two companies have some interesting crossover — Mark Vadon founded Blue Nile in 1999, and then teamed up with former Blue Nile colleague Darrell Cavens in 2009 to start Zulily.
Before founding Blue Nile, Vadon spent seven years as a consultant for Bain & Company. Bain Capital and Bain & Company are separate entites; however, both were started by Bill Bain.