Mudrick Capital II (MUDS) Terminates Blue Nile Deal

Mudrick Capital II (MUDS) Terminates Blue Nile Deal

Mudrick II (NASDAQ:MUDS) announced this morning that it has terminated its combination with online jewelry retailer Blue Nile.

The termination comes just weeks after the $683 million deal announcement, which was originally announced on June 13, and Blue Nile will now be subject to pay a hefty termination fee of up to $10 million, equal to Mudrick II’s expenses. While most SPACs have cited unfavorable market conditions as their reason for termination, Blue Nile has decided to part ways in order to enter into a different transaction agreement where it will be acquired by Sterling Jewelers Inc. (“Signet”)(NYSE:SIG).

Signet announced this morning that it has signed a definitive agreement to acquire Blue Nile for $360 million in an all cash transaction, just over half of what Blue Nile’s enterprise value, or $683 million, would have been in the SPAC deal. The cash to Blue Nile’s balance sheet in the SPAC transaction was expected to be $372 million, but that was assuming no redemptions, and had a minimum cash closing condition of $195.5M. The acquisition of the online jewelry retailer is expected to accelerate Signet’s efforts to expand its bridal offerings and grow its luxury portfolio while extending its digital leadership for jewelry.

The new transaction will be funded with cash on hand from Signet and is currently expected to close in the third quarter of 2023, but will likely not be accretive until Q4 of 2024. Upon closing, Blue Nile will be strategically positioned at the top tier of Signet’s Accessible Luxury banners along with Jared, James Allen and Diamonds Direct.

As for Mudrick II, this marks the SPAC’s second termination and has a deadline of September 10 on the horizon. The SPAC terminated its first combination with collectible card-maker Topps in August 2021 after the company announced it would not see a renewal of its foundational contract with Major League Baseball (MLB) for producing its signature cards. But, MUDS has a preliminary proxy on file to extend its transaction timeline to December 10, 2022, hoping the third deal announcement is the charm.

Bellevue, Washington-based Blue Nile is a digitally native jewelry store operating both via an online marketplace and through brick-and-mortar showrooms in the United States. Blue Nile delivered revenue of more than $500 million in calendar year 2021.