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Blue Nile to go Public; valued at $873 million
Transaction expected to provide up to $450 million of capital, including $50 million of new preferred equity provided by Mudrick Capital
By: Diamond World News Service
Jun 13 2022 4:06PM
Reference: 26383  


Bluenile, the leading online retailer of GIA graded, conflict-free diamonds, diamond engagement rings, and fine jewelry, and Mudrick Capital Acquisition Corporation II, a publicly-traded special purpose acquisition company, today announced they have entered into a definitive agreement for a business combination that will result in Blue Nile becoming a public company. Upon closing of the transaction, the combined company will be named Blue Nile and is expected to be listed on NASDAQ. The post-combination company will be led by Sean Kell, Blue Nile’s Chief Executive Officer, and the current management team.

“As the pioneer of and category leader in online fine jewelry, Blue Nile is well positioned to win as the go-to e-commerce destination in the space,” said Jason Mudrick, Founder and Chief Investment Officer of Mudrick Capital Management, L.P. “With its market leadership, track record as an innovator, talented team, and omnichannel business model, along with its proven growth vectors, Blue Nile fully addresses Mudrick Capital Acquisition Corporation II’s investment criteria. We are excited to partner with Blue Nile as it continues to be a trailblazer in the space.”

“Our vision is to help our customers celebrate all of life’s joyful occasions, big and small,” said Kell. “Over the past two and a half years we have successfully transformed and elevated Blue Nile as a thriving fine jewelry and lifestyle brand, and we are excited about the growth opportunities that lie ahead. We have only scratched the surface of an estimated $320 billion global fine jewelry market that has been slow to move online and remains fragmented. As we look to execute our growth strategy, now is the right time to become a public company.”

“We are pleased that the Mudrick team will invest in Blue Nile and help accelerate the Company’s next phase of e-commerce leadership in the fine jewelry category,” said David Humphrey, Chairman of the Board of Directors of Blue Nile and a Managing Director at Bain Capital Private Equity. “We believe Blue Nile has a significant opportunity for future market expansion as a real innovator in a large category that offers the right mix of compelling jewelry coupled with an unmatched selection of GIA graded diamonds at unbeatable values.”
The E-Commerce Leader in Fine Jewelry
Blue Nile was founded in 1999 to revolutionize the way customers shop for one of their most significant purchases – diamond engagement rings. By creating a disruptive digital platform that provides consumers with more choices, straightforward information, and exceptional service, Blue Nile demystified the diamond shopping process while passing savings onto its e-commerce customers. The Company continues to apply the same principles of disruption and customer care to an expanded assortment which now includes other fine jewelry (earrings, necklaces, pendants, bracelets, and other fashion jewelry), representing nearly half of the Company’s revenue.

A leading destination for online fine jewelry, Blue Nile has four global offices and ships to 44 countries, including China, the U.K., Canada, and Australia. Blue Nile offers customers the largest selection of more than 650,000 high-quality, conflict-free natural diamonds and an expansive fine jewelry collection with pricing at 25-50% less than that of traditional brick-and-mortar jewelers. Over the past two and a half years, Blue Nile, under an executive leadership team led by Sean Kell, has successfully migrated from the leading online diamond engagement marketplace to a fine jewelry brand driving consistent margin expansion and strong revenue growth.

Transaction Overview
The transaction is anticipated to generate approximately $450 million of capital before expenses, assuming no redemptions by the public stockholders of Mudrick Capital Acquisition Corporation II. This includes $50 million of new preferred equity provided by Mudrick Capital. It also includes $80 million of committed PIPE capital (~$50M of which has been pre-funded) from existing sponsors Bain Capital Private Equity, Bow Street, and Adama Partners, and from Mudrick Capital. Existing Blue Nile shareholders will roll over their existing equity, retaining 39% of the combined company’s pro forma equity. The pro forma implied equity value of the combined company is $873 million at the $10.15 per share PIPE price, assuming no redemptions by the public stockholders of Mudrick Capital Acquisition Corporation II. The transaction implies a pro forma enterprise value for Blue Nile of approximately $683 million.

The Boards of Directors of Blue Nile and Mudrick Capital Acquisition Corporation II have approved the transaction. The transaction, which will require the approval of Mudrick Capital Acquisition Corporation II stockholders, is subject to other customary closing conditions, including the receipt of certain regulatory approvals and a minimum cash condition. It is expected to close early in Q4 2022.


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