Dive Brief:
- DTC diamond company Blue Nile this month announced it would be re-entering the public markets through a SPAC deal with Mudrick Capital Acquisition Corporation II, a special purpose acquisition company. The deal is expected to close in the fourth quarter.
- The deal implies an enterprise value for Blue Nile of about $683 million, according to a company press release. The combined company will list on the Nasdaq stock exchange upon the deal closing.
- The transaction is expected to generate $450 million in capital before expenses, which includes $50 million of new preferred capital from Mudrick Capital and an $80 million PIPE from Bain Capital Private Equity, Bow Street and Adama Partners.
Dive Insight:
Blue Nile is preparing to re-enter the public markets after initially going public in 2004.
Just over a decade later, the DTC diamond brand — which was founded in 1999 amid the dot-com era — entered into a definitive agreement to be acquired by Bain Capital Private Equity and Bow Street for about $500 million.
Now, following a wave of IPOs from digitally native brands last year, Blue Nile hopes to become a publicly traded company again.
“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,” Jason Mudrick, Mudrick Capital’s founder and chief investment officer, said in a statement, pointing to the brand’s leadership, innovation, team and omnichannel business model as drivers of its success.
Blue Nile now ships to 44 countries, including China, the U.K. and Australia and has served more than 2.7 million customers. Aside from continuing to invest in its digital channels, the brand hopes to open around 40 showrooms by the end of 2023.
Blue Nile also touts its collection of more than 650,000 high-quality, “conflict-free” natural diamonds. While questions remain around what constitutes ethically obtained diamonds, with some critics saying no such thing exists yet, Blue Nile says it uses measures such as the Kimberley Process, which tracks diamonds from mine to market.
Blue Nile’s SPAC deal also follows a boom year for deals in retail. Retail Dive tracked around 80 major deals in the industry, with over 15 being initial public offerings, including Allbirds, Rent the Runway and jewelry brand Brilliant Earth. But IPOs in 2022 have been off to a slower start.
According to a report from MKM Partners released earlier this month, IPO activity in 2022 is at its lowest annual run rate in 20 years. Factors such as war in Ukraine, rising commodity and energy prices, price correction in overvalued stocks, inflation and interest rate hikes, potential legislative changes and the lingering economic impacts of the pandemic have caused activity to slow. However, the analysts noted that “as macro uncertainties linger and volatile market conditions persist, the backlog of IPO candidates and pipeline should continue to build.”
For SPAC deals in particular, the group expects activity to pick up throughout the year as about 600 SPACs are still seeking out targets to merge with.
