Nordstrom, the century-old department store chain, has agreed to be acquired and taken private in a $6.25 billion deal. The acquisition will be led by Nordstrom family members and a Mexican retail group. This move comes as the retail industry faces increasing pressure from discount chains and other competitors.
Going private could provide Nordstrom with more flexibility to revive its business, which has struggled to boost sales in recent years. Shareholders of Nordstrom will receive $24.25 in cash per share, totaling around $4 billion. This offer represents a 42% premium on the company’s stock price as of March 18, when news of the potential acquisition first emerged.
In addition to buying out the company’s shares, the acquiring group will also assume over $2 billion in Nordstrom’s debt. Traditional department stores like Nordstrom have faced tough competition from retail giants such as Walmart, Target, fast-fashion brands, and online retailers like Amazon. Rivals Macy’s and Kohl’s have similarly been under pressure from major investors to make significant changes to increase profitability.
Nordstrom’s sales have remained stagnant over the past decade, and the company revealed last year that it would be closing all its Canadian stores and laying off 2,500 employees as part of its exit from the country. Nordstrom initially entered the Canadian market in 2012, opening its first store in Calgary at CF Chinook Centre in September 2014.
The offer announced on Monday surpasses the previous $23-per-share bid made by the Nordstrom family and the Mexican retail group, El Puerto de Liverpool, in September. Additionally, the board plans to approve a special dividend of up to 25 cents per share, depending on Nordstrom’s cash available at the time of the transaction’s closure. The deal is anticipated to be finalized in the first half of 2025, at which point Nordstrom’s shares will be delisted and no longer traded publicly.
Neil Saunders, Managing Director of GlobalData, noted that while a change in ownership won’t immediately fix all of Nordstrom’s challenges, it will allow the Nordstrom family and their partners to focus on long-term strategies and necessary changes without the pressure of short-term expectations from public markets.
Nordstrom’s board has unanimously approved the proposed deal, with family members Erik and Pete Nordstrom, who are part of the family taking over the company, recusing themselves from the vote. Once the deal is finalized, the Nordstrom family will hold a majority stake in the company. Erik and Pete, who represent the fourth generation of leadership at the Seattle-based retailer, will continue in their roles, with Erik serving as CEO and Pete as president.
After opening 23 new stores this year, Nordstrom now operates a total of 381 stores, including both Nordstrom and Nordstrom Rack locations across the U.S. While Nordstrom’s stock fell by around 1.5% on Monday, it has risen 34% this year, driven by speculation of a family takeover. However, the company’s stock remains significantly lower than the post-pandemic highs above $40 per share.
Bruce Nordstrom, a retail executive who played a key role in transforming his family’s Pacific Northwest department store chain into a prominent upscale brand, passed away in May at the age of 90. In 2017, he, along with other family members, attempted to take the company private by proposing to purchase the 70% of Nordstrom’s stock they did not already own. Although those negotiations fell through in 2018, his sons revived the buyout discussions earlier this year, ultimately leading to Monday’s announcement of the acquisition.