Shares of Blue Nile (NILE) spiked in pre-market trading after the luxury jeweler announced plans to be acquired by private equity firm Bain capital and Bow Street for $500M.

BUYOUT AGREEMENT: Blue Nile announced this morning that it has agreed to be acquired by an investor group consisting of funds managed by Bain Capital and Bow Street for about $500M in cash. Under the terms of the deal, Blue Nile investors will receive $40.75 per share in cash, a 34% premium to Friday's closing price. The deal is is expected to close in the first quarter of 2017, and includes a clause under which Blue Nile may solicit other buyout proposals during a 30-day go-shop period. Blue Nile Chairman and Chief Executive Officer Harvey Kanter commented that "Since its inception, Blue Nile's guiding principle has been to provide value to its customers, suppliers, and shareholders, and this transaction provides tremendous value to all." Ryan Cotton, a managing director at Bain Capital Private Equity, added that "This is an opportunity to acquire a true disruptor in a fundamentally attractive and growing segment of the diamond industry... We believe the company will continue to grow as educated consumers continue to seek easy and convenient shopping experiences that deliver transparent pricing and enhanced value." The companies said in the statement that Blue Nile's board of directors unanimously approved the deal and recommended investors vote for the transaction. Following the close of the transaction, Blue Nile will become a privately-held company.

QUARTERLY EARNINGS: Separately, Blue Nile reported third quarter earnings this morning. The retailer reported Q3 earnings per share of 11c on revenue of $105.1M, slightly below analysts' consensus estimates of 12c and $107.75M, respectively. The third quarter earnings are also below Blue Nile's previous guidance of 11c-14c for EPS and $107M-$111M for revenue. Blue Nile said U.S. engagement net sales for the quarter fell 8.5% to $59.5M, while U.S. non-engagement net sales increased 1.2% to $25.3M. The company did not update its previously provided guidance for fiscal year 2016, which included EPS of 88c-95c on revenue of $65M-$495M.

PRICE ACTION: Blue Nile is up about 32% to $40.21 per share in pre-market trading.

OTHERS TO WATCH: Other publicly traded retailers of fine jewelry include Tiffany & Co. (TIF) and Signet Jewelers (SIG).