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 the department store faces pressure from discount chains and other competition .
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 over the company’s stock as of March 18 , when the media reported a possible transaction. Nordstroms will also take on more than $2 billion in debt.
As a private business, Nordstroms may have more leeway to revive a department store chain that, like others, has struggled to revive lackluster sales for years. Other publicly traded retailers, such as Macy’s and Kohl’s, have faced pressure from major investors to provide higher returns to investors while trying to fend off competition from low-cost rivals such as Walmart and Amazon.com.
“While a change in ownership does not automatically solve all the problems with the department store’s operation, it will allow the family and its backers to take a long-term view of the business and make the necessary investments and changes away from the scrutiny of short term of the business. public markets,” GlobalData analyst Neil Saunders noted in a research note on Monday.
He added: “The [Nordstrom] the family has the talent and ability to enact change as El Puerto de Liverpool does. They will likely run the business as a retailer rather than as some sort of financial play which, in our view, 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 afternoon trading.
Nordstrom family, offer from El Puerto de Liverpool
The offer announced on Monday exceeds the previous offer of $23 per share which the Nordstrom family and Mexican retail group, El Puerto de Liverpool, did 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 the closing of the transaction.
The deal is expected to close in the first half of 2025, when the company’s shares will no longer be publicly traded.
Nordstrom’s board of directors unanimously approved the proposed transaction, and members Erik and Pete Nordstrom, part of the Nordstrom family, took 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 are the fourth-generation leadership of the Seattle retailer, which was founded in 1901 as a shoe store. Erik is the CEO of the company and Peter is the president.
After opening 23 new stores so far this year, the company now operates a combined 381 Nordstrom and Nordstrom Rack stores in the US.