Online jeweler Blue Nile (NASDAQ: NILE) made a surprising announcement Monday morning that it has reached an agreement to be acquired by a newer investment group made up of various mutual funds managed by Bow Street LLC and Bain Capital Private Equity. This is an all cash deal valued at roughly $500 million.
Blue Nile (NASDAQ: NILE) shares were up more than 33% in early trading Monday to $40.68. Shares had been down 13% so far this year.
This announcements comes at a time when the Seattle-based company saw a 4.3 percent drop in net sales , as demonstrated in its third quarter earnings report. The company fell to $105.1 million for the period (which ended October 2).
In the deal, Bow Street and Bain Capital will pick up 100 percent of Blue Nile’s outstanding common stock shares. Accordingly, those who hold Blue Nile stock will each receive $40.75 in cash, per share. This represents a premium of roughly 34 percent over the firm’s closing price at the end of day, last week.
Now, the deal does requires a few customary closing conditions, which includes approval by Blue Nile’s stockholders, of course, as well as from regulators. Such conditions are expected towards the close of the first quarter, next year.
“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,” explains Blue Nile chairman Ceo 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.”
In addition, Bain Capital 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…. 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.”
Altogether, Blue Nile (NASDAQ: NILE) posted, Monday, a net income that falls inline with Wall Street expectations at $1.3 million (or approximately 11 cents per share in the third quarter). Furthermore, operating income in the same quarter totaled $1.8 million. That represents an operating margin of 1.7 percent in net sales. In the same quarter from 2015, the company saw an operating income of $3 million with an operating marging of 2.8 percent.