The upscale departmental store Nordstrom has undergone a privatization deal for $6.25 billion with its family members and a Mexican department store chain. This news of Nordstrom family business deal, was announced on Monday. This acquisition will give the family a majority ownership stake in the 123-year-old company, Nordstrom.
As per the retailer, upon completion of transaction, the family, Erik, Pete and Jamie Nordstrom and other members of the family as well as Mexican department store chain El Puerto de Liverpool will acquire the remaining shares they do not own.
Why Nordstrom family made it private?
Nordstrom has been the target of takeover in recent years, due to the falling sales and shares in slump. The Nordstrom family has wanted to take the company private in part because it believes it is undervalued in the public markets after a 70% tumble since 2015, as per report.
Nordstrom privatization deal
Nordstrom has around 350 locations, and will be going private as a result of the deal and the family will have a majority ownership stake, according to the company.
The shareholders that is mostly family will receive $24.25 in cash for each share, a roughly 42% premium of the stock based on the price on March 18, The stock fell 1% in in early trading and is up more than 30% for the year.
Nordstrom family acquisition
Nordstrom family collectively own 33.4% of the company, as per report. Liverpool, which operates more than 300 stores and an e-commerce platform, holds a 9.6% stake in Nordstrom which it acquired in 2022 for about $300 million, the outlet said.
“For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” Erik Nordstrom, chief executive officer of Nordstrom, said in a statement. “Today marks an exciting new chapter for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future.”
Nordstrom giving dividend
Nordstrom’s common shareholders will receive $24.25 in cash for each share of the company’s common stock that they hold, per the agreement. The numbers as per Nordstrom is based on a premium of 42% to the company’s unaffected closing common stock price on March 18.
In addition to the payout, the board intends to authorize a special dividend of up to $0.25 per share immediately before and contingent on the close of the deal, according to Nordstrom. This dividend is based on Nordstrom’s cash on hand, the company said.
Nordstrom deal completion
The deal for Nordstrom is expected to close in the first half of 2025, as per the company. The breakdown for the ownership of Nordstrom will be 50.1% by the family and 49.9% by Liverpool. As with any private company, the Nordstrom common stock will no longer be listed on public markets. When the market closed on Monday, Nordstrom’s stock was at $24.17.
Earlier attempt at privatization by Nordstrom
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.
Department stores under pressure
Nordstrom has seen low footfalls and lower spending. Customers 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.
Department stores are at a crossroads, with rivals Macy’s and Bloomingdale’s coming under pressure from investors who think the companies’ real estate might be more valuable than its retail operations. Macy’s has, so far, shrugged off activist investors’ attempts at making major changes.
