One of Blue Nile's recently opened "Webroom" retail locations. Image source: Blue Nile, Inc.

What happened

Shares of Blue Nile Inc. (NASDAQ:NILE) were up 34.3% as of 11:30 a.m. EST Monday after the online jewelry retailer announced it has agreed to be acquired.

So what

More specifically, Blue Nile has entered into a definitive agreement to be acquired for roughly $500 million (or $40.75 per share) in cash by an investor group comprised of private equity funds Bain Capital and Bow Street LLC. That's a premium of roughly 34% over Blue Nile's closing price on Friday.

Blue Nile CEO Harvey Kanter explained: "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. Blue Nile will continue its innovative drive that has disrupted the diamond industry and made us the smartest, easiest, and most pressure-free way for consumers to buy a diamond."

Now what

The purchase still requires the approval of both regulators and Blue Nile shareholders. And Blue Nile has 30 days to solicit alternative acquisition proposals per the terms of the agreement.

But as it stands, the acquisition is expected to close in the first quarter of 2017. With shares trading slightly above the proposed acquisition price and having nearly doubled from their 52-week lows in February, I think Blue Nile shareholders -- those who don't need to postpone selling in order to get more favorable long-term capital gains tax treatment -- would be wise to take today's profits and put their money to work elsewhere.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.