Nordstrom Family Deal
Nordstrom Family.With its founding family, Nordstrom, the high-end department store business, is going private in a $6.25 billion deal.
In order to give the Nordstrom family a 75% ownership stake in the 123-year-old business, the retailer said on Monday that Erik, Pete, and Jamie Nordstrom, along with the Mexican department store chain El Puerto de Liverpool, will buy the remaining shares they do not currently control.
The cash payout to shareholders is $24.25 per share, which is almost 42% more than the stock price on March 18, 2024, when rumours of Nordstrom (JWN) going private first surfaced. The stock is up almost 30% for the year, despite a 1% decline in early trade.
In a press announcement, CEO Erik Nordstrom stated, “Nordstrom family has operated with a foundational principle of helping customers feel good and look their best for over a century.” “The company is embarking on an exciting new phase today. My family and I look forward to collaborating with our colleagues to make sure Nordstrom continues to prosper for a very long time.
Nordstrom’s founding family tried taking the retailer private in 2018 at $50 per share, but the board said that was too low of a price. Monday’s announcement marks a stunning decline from the company’s pre-pandemic peak with its stock worth roughly half since then.
Like other department stores, Nordstrom has suffered from consumers cutting back on discretionary spending and shifting their habits to online rivals, like Amazon or rental startups such as Nuuly. In July, Saks Fifth Avenue and Neiman Marcus announced a merger giving them more leverage to negotiate with luxury brands for lower costs.
The family and its supporters can now “make necessary investments and changes away from the short term scrutiny of public markets,” according to a note written by Neil Saunders, managing director of GlobalData, who commended the move.
Like El Puerto de Liverpool, the family is talented and capable of bringing about change. They will probably operate the company more like a shop than as a financial venture, which is, in our opinion, highly beneficial for the brand’s long-term viability,” Saunders stated.
With competitors Macy’s and Bloomingdale’s facing pressure from investors who believe the companies’ real estate may be worth more than their retail operations, department shops are at a crossroads. Thus far, Macy’s has dismissed activist investors attempts at making major changes.
The Nordstrom deal, which is expected to close in early 2025, has to be approved by two-thirds of the company’s common stockholders.
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