Among those who considered a purchase: a Chinese jeweler, a large department store, and a U.S. jewelry retailer
For the last few years, I have spoken with investors frustrated about Blue Nile’s ongoing lack of traction. Some thought it needed to be taken private. As a new proxy filing reveals, the e-tailer’s board was well aware that something needed to be done, and there had been talks about selling the Seattle-based company since late 2014.
Among the parties Blue Nile talked with regarding either an acquisition or a partnership:
– a “large jeweler in mainland China”;
– a “Chinese department store”;
– a “large department store chain”;
– and at least four “financial sponsors.”
Blue Nile also considered buying a “private diamond and jewelry company,” but decided not to.
In August 2015, it began an active sales process, with the company’s financial advisor, Bank of America Merrill Lynch, feeling out 13 strategic buyers, including “a domestic jewelry retailer.” Most that took a look also took a pass, citing the difficulty in justifying a premium to its stock price.
In June of this year, a major Blue Nile vendor introduced CEO Harvey Kanter to representatives of Bow Street LLC, the eventual acquirer.
As discussions heated up, Bank of America Merrill Lynch reached out to three other possible acquirers: the large department store chain, the domestic jewelry retailer, and a new entrant into the mix, an e-commerce company. In the end, though, the domestic jewelry retailer decided that acquiring Blue Nile was “not a strategic focus,” the department store was scared off by the “EBITA multiples” implied by the requested price, and the e-tailer cited “concerns about Blue Nile’s growth profile.”
As a result, Bow Street and acquisition partner Bain Capital Private Equity look like they will get control of the company in a $500 million deal that represents a 34 percent premium over its Nov. 4 share price. The transaction takes Blue Nile private for the first time since 2004.