Nordstrom Family Takes Retail Chain Private
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The Nordstrom family is moving forward with a plan to take their namesake department store chain private in a deal valued at approximately $6.25 billion, which includes debt. This all-cash transaction is partnered with Mexican retailer El Puerto de Liverpool.
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In recent years, the Nordstrom family has observed a significant decline in the company’s stock, with shares dropping by 40% over the previous five years while the S&P 500 rose by 84%. This trend has led the family to believe that removing the pressure of public market scrutiny could potentially allow for better management and growth.
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Under the terms of the agreement, expected to close within the first half of 2025, the Nordstrom family will own 50.1% of the company while El Puerto de Liverpool will hold 49.9%. Shareholders of Nordstrom will receive $24.25 in cash per share, a price that aligns with the stock’s trading value as of the announcement.
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On the announcement day, Nordstrom shares fell by approximately 1.3% in New York, but they were up 33% for the year prior to the news, significantly influenced by rumors surrounding the private acquisition.
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This shift to private ownership is also a response to the broader struggles faced by traditional department stores competing against online giants like Amazon and discount retailers. As Nordstrom’s sales plateaued, the company has sought ways to adapt, including exploring its off-price Nordstrom Rack stores, which experienced mixed performance.
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Neil Saunders, Managing Director of GlobalData, commented on this transition, stating, ‘While a change in ownership does not automatically remedy all of the problems with the department store operation, it will allow the family and their backers to take a long-term view of the business and make necessary investments and changes away from the short-term scrutiny of public markets.’
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The transaction will involve a combination of financing strategies including rollover equity, cash commitments, and new bank financing. To complete the deal, it must be approved by holders of two-thirds of Nordstrom’s common stock. Interestingly, members of the Nordstrom family recused themselves from voting on the deal.
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As the retail environment continues to evolve, the Nordstrom family is optimistic about steering the company toward future success beyond the pressures of public trading.
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Conclusion
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Nordstrom’s transition to private ownership marks a significant chapter in its long history and presents both challenges and opportunities ahead.
