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Online jeweler Blue Nile plans to go private in a $500 million cash deal

November 7, 2016 09:18 AM
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Online jewelry retailer Blue Nile Inc. has agreed to be acquired for $500 million in cash by a group led by venture capital firm Bain Capital and hedge fund Bow Street LLC.

Blue Nile announced the acquisition Monday morning slightly ahead of its third quarter earnings release. The investor group plan to pay $40.75 per share to acquire Blue Nile, a 33.9% premium over the retailer’s Friday closing price of $30.44 a share. The deal, expected to close early next year, will make the publicly traded company private.

According to Top500Guide.com, Blue Nile grew its online sales to $480.1 million in 2015, up 1.4% from $473.5 million in 2014. Internet Retailer ranks Blue Nile, No. 82 in the Internet Retailer 2016 Top 500 Guide, as the largest online jewelry retailer in North America based on 2015 online sales.

"Blue Nile is a unique business with a strong platform in an industry that is rapidly evolving and migrating online,” says Howard Shainker, managing partner at Bow Street.

Blue Nile, which started out as an online-only retailer, has been making an omnichannel push over the past year and a half. The retailer opened its first physical showroom at the Roosevelt Field mall on Long Island in June 2015. Since then, Blue Nile has added three more showrooms, including ones in White Plains, N.Y.; Fairfax County, Va. and Portland, Ore. A fifth showroom is scheduled to open at a yet-to-be-announced location in time for the holiday shopping season.

The showrooms, which don’t carry inventory, are designed to give shoppers the opportunity to see and touch an assortment of the company’s products before going online to make their purchases. Shoppers can make online purchases in the showrooms by buying on tablets that the retailer’s sales representatives have on hand.

For the third quarter ended Oct. 2, Blue Nile reported:

  • Net sales of $105.1 million, down 4.4% from $109.9 million last year.
  • Net income of $1.3 million, down 35.0% from $2.0 million last year.

For the first nine months of 2016, Blue Nile reported:

  • Net sales of $321.9 million, down 2.5% from $330.1 million last year.
  • Net income of $4.5 million, down 18.2% from $5.5 million last year. 
 

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