Blue Nile Purchased by Bain Capital

The news comes as the e-tailer announced falling sales, profits

An investment group has purchased Blue Nile for $500 million, ending the e-tailer’s 12 years as a public company.

The investor group is composed of funds managed by Bain Capital Private Equity and Bow Street LLC. The deal includes a 30-day “go shop” period, during which the company can solicit alternative offers. Otherwise, it is expected to be completed next year.

The all-cash deal has already been approved by the company’s board of directors. It calls for shareholders to be paid $40.75 a share, a 34 percent premium over its Nov. 4 closing price.

Blue Nile said it expects to keep its headquarters in Seattle. Other than that, the initial announcement offers few clues to the jewelry industry’s largest e-tailer’s future plans. Howard Shainker, managing partner at Bow Street, said in a statement: “Blue Nile is a unique business with a strong platform in an industry that is rapidly evolving and migrating online. We are excited to work alongside Blue Nile management and Bain Capital to execute on the company’s strategy.”

The company and the two investors either declined or did not respond to requests for comment. Blue Nile canceled a conference call originally scheduled for this morning.

One seeming winner from this deal: former Blue Nile chairman Mark Vadon, who in June bought 5 percent of the company.

As is typical with these transactions, the deal drew the attention of shareholder law firms, with one launching an investigation.

The news comes as the company announced downbeat financial results for the third quarter, with both sales and profits taking tumbles.

Net sales decreased to $105.1 million, a 4.3 percent drop from the prior year. Net income hit $1.3 million, compared to $2 million the prior year.

U.S. sales of its core product—engagement rings—fell 8.5 percent to $59.5 million. Non-engagement sales rose 1.2 percent to $25.3 million.

 

JCK News Director