Seattle-based online jeweler Blue Nile (NASDAQ:NILE) has agreed to be acquired by Bain Capital Private Equity and Bow Street for about $500 million in cash. Shareholders will receive $40.75 per share, representing a 34% premium over Blue Nile’s closing price on Friday, in a transaction expected to close 1Q 2017.
Founded by a Seattle jeweler looking to take advantage of the internet boom, the site that became Blue Nile caught the eye of would-be CEO Mark Vadon in 1998 after he had a bad experience at Tiffany’s. When he learned the site was already producing $250,000 in monthly revenue with little advertising, Vadon did what many others were doing in those days: He raised millions in venture capital and acquired 85% of the company for $5 million.
Vadon and Blue Nile went on to secure millions more in funding from investors such as Bessemer Venture Partners, Kleiner Perkins Caufield & Byers, Trinity Ventures and Lightspeed Venture Partners before completing a public offering in 2004.
If that story sounds familiar, it may be because another& company that counts Vadon amongst its founders—Zulily—boasts a similar history. Started in 2009 by Vadon and Darrel Cavens (who previously served as CTO at Blue Nile), the online retailer raised about $128 million in VC funding from firms including Maveron, August Capital and Trinity Ventures before debuting on the public markets in 2013.
Zulily’s stock initially rocketed upward, reaching as high as $73.50 in February 2014. But in the end, it didn’t last nearly as long as Blue Nile as a publicly traded company. With its share price plummeting, Zulily was acquired by QVC parent company Liberty Interactive for $18.75 per share in August 2015, just a year and a half after its public debut. Blue Nile, meanwhile, peaked at nearly $100 per share in 2007; the company’s share price hasn’t topped the $50 mark since 2011.
Article by Mikey Tom, PitchBook