Jewelry company Blue Nile to go public in latest transaction

Online fine jewelry company Blue Nile, Inc. is set to go public in an agreement with special purpose acquisition company Mudrick Capital Acquisition Corporation II (Nasdaq: MUDS) to to increase its market share.

Under the June 10 agreement, Blue Nile’s pro forma enterprise value is $683 million. It will generate approximately $450 million in capital before expenses, including $50 million in new Mudrick senior financing and $80 million in committed PIPE financing, of which $50 million has been pre-funded.

In addition, according to filings, current Blue Nile shareholders will renew their existing equity and retain 39% of the combined company’s pro forma equity. The implied pro forma equity value of the combined company is $873 million at $10.15 per share (the PIPE price)

Founded in 1999, Blue Nile has supposedly changed the way consumers can shop for “conflict-free, GIA-rated diamonds, diamond engagement rings and fine jewelry” through its e-commerce platform, which has disrupted the jewelry market, according to filings. As a result, Blue Nile is the leader in fine jewelry e-commerce. The filings indicate that Blue Nile also saves customers money, as its jewelry tends to cost customers “25-50% less than that of traditional jewelers.”

“As the pioneer and category leader of fine jewelry online, 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, LP in a press release. “With its market leadership, track record as an innovator, talented team and omnichannel business model, as well as proven drivers of growth, Blue Nile fully meets the investment criteria for Mudrick Capital Acquisition Corporation II. We are thrilled to partner with Blue Nile as they continue to be a pioneer in the space.

The filing notes that the new combined company will be led by current Blue Nile CEO Sean Kell along with his current management team. Under Kell, the company grew from being a leading diamond engagement ring retailer into a fine jewelry market.

“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 ahead of us,” said Kell. in a press release. “We have only scratched the surface of an estimated $320 billion global fine jewelry market that has been slow to come online and remains fragmented. As we seek to execute our growth strategy, now is the time to go public. »

Blue Nile is expected to grow because it is well positioned to “capitalize on the fragmented and growing $320 billion global fine jewelry market”; it also has a strong customer value proposition and recurring business; its omnichannel business model provides a competitive advantage; it has good customer service partly because of its data and technology; and his strong leadership.

The agreement also has a non-shop provision. The merged company will be called Blue Nile and will likely be listed on Nasdaq; however, the Nasdaq listing symbol was not disclosed.

The reverse triangular merger is expected to close in early Q4 2022. It has already been approved by each company’s board of directors and is subject to customary closing conditions and regulatory approval.

Blue Nile is represented by Weil, Gotshal & Manges LLP. Mudrick Capital’s legal advisor is Kirkland & Ellis LLP and its financial advisor is Jefferies LLC.

Comments are closed.