Nordstrom family to take chain private in $6.25 billion deal (#1688293)

Nordstrom Inc. will go private in an all-cash transaction valued at about $6.25 billion in a bet by the founding family that the department store company will be more successful without the scrutiny and demands of the public market.

As part of the transaction, which is expected to close in the first half of 2025, the family will acquire all outstanding common shares of Nordstrom not already owned by the Nordstrom family and Mexican department store chain El Puerto de Liverpool SAB .

Under the terms of the deal, Nordstrom common shareholders will receive $24.25 in cash for each share of Nordstrom common stock they own, the company said Monday. The Nordstrom family will have a majority stake in the company at 50.1%, while Liverpool will own 49.9%.

Nordstrom shares fell 1.5% in premarket trading in the United States. The company's shares were up 33% year-to-date as of Friday's close, compared with a 12% rise in the S&P Midcap 400 Index.

The board's acceptance of the offer underscores Nordstrom's decline from its peak and its dim growth prospects. In 2018, the board rejected the family's offer to take the company private at $50 per share as too low.

Nordstrom's annual revenue, including credit card revenue, peaked at $15.9 billion in the fiscal year ending February 2019. The company was hit hard by Covid-19 and has never returned to its pre-pandemic highs. Nordstrom is expected to post $14.9 billion in total revenue at the end of the current fiscal year, according to a Bloomberg survey of analysts.

Other U.S. department store chains have also struggled as shoppers turn to online competitors like Amazon.com Inc. or brand-specific stores like Louis Vuitton. Executives at Macy's Inc., for example, are reducing the company's store fleet to cut costs, while the owners of Saks Fifth Avenue bought Neiman Marcus Group earlier this year.

The privatization deal will be financed through a combination of refinanced equity from the Nordstrom family and Liverpool, cash commitments from Liverpool, up to $450 million in borrowings under a new $1.2 billion ABL bank financing, and cash on hand from the company. The board also intends to pay a special dividend of up to 25 cents per share in cash depending on the closing of the deal.

The transaction must be approved by holders of two-thirds of the company's common stock and holders of a majority of the shares who are not owned by the Nordstrom family or Liverpool.

Erik and Peter Nordstrom, members of the company's board of directors, abstained from participating in the vote, which approved the transaction unanimously.

“On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives in the future,” said Erik Nordstrom, CEO of Nordstrom.