Nordstrom, the upscale department store chain, has announced its decision to go private in a $6.25 billion deal with its founding family. The Nordstrom family, consisting of Erik, Pete, and Jamie Nordstrom, along with Mexican department store chain El Puerto de Liverpool, will acquire the remaining shares they do not already own, giving the family a majority ownership stake in the 123-year-old company.
Shareholders are set to receive $24.25 in cash for each share, representing a premium of approximately 42% based on the stock price on March 18, 2024, when speculation about Nordstrom (JWN) going private first emerged. The stock experienced a 1% decline in early trading but has seen an overall increase of more than 30% for the year.
CEO Erik Nordstrom expressed his excitement about this new chapter for the business, emphasizing the company's longstanding commitment to helping customers feel good and look their best. The Nordstrom family had previously attempted to take the retailer private in 2018 at $50 per share, but the board deemed the offer too low.
This move marks a significant shift from Nordstrom's pre-pandemic peak, with the company's stock value now approximately half of what it was back then. Like other department stores, Nordstrom has faced challenges due to changing consumer habits, with more people opting for online shopping platforms like Amazon and rental services such as Nuuly.
In a bid to stay competitive, Saks Fifth Avenue and Neiman Marcus recently announced a merger to enhance their bargaining power with luxury brands. Neil Saunders, managing director of GlobalData, commended Nordstrom's decision, noting that operating away from the public markets' short-term scrutiny will allow the family to make necessary investments and changes for the brand's long-term health.
Department stores, including rivals Macy's and Bloomingdale's, are navigating a challenging landscape, with investors questioning the value of their real estate assets compared to their retail operations. Macy's has resisted pressure from activist investors seeking significant changes.
The Nordstrom deal, expected to be finalized in early 2025, is subject to approval by two-thirds of the company's common stockholders.
