Nordstrom Inc.’s founding family has submitted a $3.76 billion proposal to take the department store chain private.
Led by Erik Nordstrom, Nordstom’s CEO, and Peter Nordstrom, the corporate’s president, the family has partnered with Mexico-based retailer El Puerto de Liverpool, offering $23 per share in money for the remaining shares the parties don’t already own. That is the family’s second attempt in six years to realize full control of the retailer.
A special committee of Nordstrom’s board, formed earlier this yr after the family first expressed interest in a possible takeover, is now reviewing the proposal.
Nordstrom ranks No. 21 on Digital Commerce 360’s Top 1000 list of the biggest online retailers in North America, where it falls under the Apparel & Accessories category. Digital Commerce 360 projects that Nordstom’s online sales will reach $4.61 billion in 2024.
Nordstrom web sales by yr
Nordstrom’s proposal under review
Reuters first reported in March that the founding family was exploring plans to take the 123-year-old company private.
On Sept. 4, the special committee — made up of independent and disinterested directors of Nordstrom’s board — confirmed it had received a proposal. The committee’s next step is to seek the advice of with outside financial and legal advisers to judge whether the offer is “in the most effective interests of Nordstrom and all shareholders.”
Members of the Nordstrom family collectively own 33.4% of the corporate, while Mexico-based El Puerto de Liverpool, which operates greater than 300 stores and an ecommerce platform, holds a 9.6% stake it acquired in 2022 for about $300 million.
El Puerto de Liverpool ranks No. 30 within the Top 1000. Digital Commerce 360 projects that its online sales will reach $3.89 billion in 2024.
El Puerto de Liverpool web sales by yr
If approved, the deal would increase the Nordstrom family’s ownership to 50.1%, with Liverpool holding the remaining shares. The transaction can be financed through a combination of rollover equity and money commitments by the Nordstrom family and Liverpool, together with $250 million in latest bank financing, in response to an organization news release. Existing debt would remain in place.
A second bid, following a failed 2017 offer
The $23-per-share bid represents only a nominal premium over Nordstrom’s $22 closing stock price on Monday. Nonetheless, it falls significantly in need of the $50-per-share offer made by the family in 2017. That provide valued the corporate at $8.4 billion. In 2018, the special committee rejected that provide as insufficient, and talks ultimately broke down when each side failed to succeed in an agreement on price.
While Nordstrom’s takeover effort is family-driven, Macy’s Inc. recently ended similar talks with investor group Arkhouse Management and Brigade Capital Management after seven months of negotiations, citing the dearth of a “compelling” offer with secured financing. Macy’s ranks No. 16 within the Top 1000.
Neil Saunders, managing director at GlobalData, explained that Macy’s prospective buyers were in search of short-term profits by monetizing assets, which can have weakened the corporate. In contrast, the Nordstrom family goals to take the corporate private to give attention to a long-term strategy, free from the pressures of public markets.
“This makes some sense and, despite recent issues at Nordstrom, will probably strengthen the retailer,” Saunders wrote in a LinkedIn post earlier this yr.
Sales stabilizing
Nordstrom, like many other shops, has faced declining traffic lately. Nonetheless, Saunders noted in a separate post that the corporate’s sales have stabilized. For instance, Nordstrom’s Q2 2024 sales were down just 0.6% in comparison with Q2 2019, while Macy’s and Kohl’s reported larger declines of 11% and 15.4%, respectively.
In Q2 2024, Nordstrom reported a 3.4% increase in net sales, reaching $3.8 billion. Nordstrom digital sales accounted for 37% of total revenue, up from 36% the previous yr. CEO Erik Nordstrom highlighted that digital sales saw continued momentum, with a 6% rise in net sales.
The corporate’s Nordstrom Rack stores have also develop into a key strength, with sales jumping 8.8% in probably the most recent quarter, and comparable sales rising 4.1%.
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