Century-old department store Nordstrom has agreed to be acquired and taken private by members of the Nordstrom family and a Mexican retail group in a $6.25 billion deal that comes as department stores are facing pressure from discount chains and other competitors.
Nordstrom shareholders will receive $24.25 in cash for each share of Nordstrom common stock, or about $4 billion in total, representing a 42% premium to the company’s stock as of March 18, when media reports of a potential transaction. The Nordstroms will also take on more than $2 billion in debt.
As a private company, the Nordstroms could have more leeway to revive a department store chain that, like others, has been seeking to revive lackluster sales for years. Other publicly traded retailers, including Macy’s and Kohl’s, have faced pressure from large investors to offer higher returns to investors, while also trying to fend off competition from lower-cost rivals such as Walmart and Amazon.com.
“While a change in ownership does not automatically resolve all of the department store’s operating issues, it will allow the family and its backers to take a long-term view of the business and make investments and to necessary changes, away from the company’s short-term control of public markets,” GlobalData analyst Neil Saunders noted in a Monday research note.
He added: “The [Nordstrom] The family has the talent and ability to implement change, just like Liverpool’s El Puerto. They’ll likely run the company like a retailer rather than some sort of financial play, which we think is a very positive thing for the long-term health of the brand. »
Nordstrom shares fell 36 cents, or 1.5%, to $24.17 in late morning trading.
Nordstrom family, the El Puerto de Liverpool offer
This offer announced Monday exceeds the previous offer of $23 per share that the Nordstrom family and Mexican retail group El Puerto of Liverpool achieved in September.
The board also plans to authorize a special dividend of up to 25 cents per share, based on Nordstrom’s cash on hand immediately prior to and subject to the closing of the transaction.
The transaction is expected to be completed in the first half of 2025, at which point the company’s shares will no longer be traded on the stock exchange.
Nordstrom’s board of directors unanimously approved the proposed transaction, with members Erik and Pete Nordstrom, members of the Nordstrom family taking over the company, recusing themselves from that vote.
After the transaction closes, the Nordstrom family will own a majority stake in the company. Erik and Pete Nordstrom represent the fourth generation of leadership at the Seattle retailer, founded in 1901 as a shoe store. Erik is the general manager of the company and Peter is the president.
After opening 23 new stores so far this year, the company now operates 381 Nordstrom and Nordstrom Rack stores in the United States.
