EXEC: Nordstrom Family Offers Path to Take Namesakes Retailer Private

A real deal to go private is finally on the table at Nordstrom Inc., with family members Erik Nordstrom and Pete Nordstrom at the center of a proposed $3.76 billion deal.

As previously reported by SGB Media in April, the Board of Directors of Nordstrom, Inc. reported that as part of its evaluation of a wide range of strategic, financial, and operational alternatives as the company continues to execute its strategic plan, CEO Erik Nordstrom and President Pete Nordstrom expressed interest in taking the company private. The Board of Directors has now confirmed receipt of a proposal from the Nordstrom family and others to acquire the company.

The two executives have reportedly partnered with other members of the Nordstrom family and Mexican retail concern El Puerto de Liverpool, S.A.B. de C.V. to acquire all of the outstanding shares of the company, other than shares held by members of the Nordstrom family and Liverpool, for $23.00 per share in cash. The current offer on the table was less than half of the $50.00 per share that the family offered to take the company private in 2018 in a failed effort.

Nordstrom shares jumped to over $23.00 as the market opened on Wednesday, September 4, but settled back down under $23.00 after about an hour’s time.

As previously reported by SGB Media, the 2018 overture by the Nordstrom family was valued at $8.4 billion. A special committee of Nordstrom’s Board of Directors at the time rejected the proposal, saying the price was too low.

In a statement issued by the company in early March 2018, the Special Committee of the Board of Directors of Nordstrom Inc. said it had been notified by a group consisting of members of the Nordstrom family, including company Co-Presidents Blake W. Nordstrom, Peter E. Nordstrom and Erik B. Nordstrom; President of Stores James F. Nordstrom; Chairman Emeritus Bruce A. Nordstrom and Anne E. Gittinger, that the Group intended to submit a proposal to purchase all of the outstanding shares of common stock of the company not already owned by the family’s investor Group, and approximately 21 percent of the shares owned by the Nordstrom family members in the Group, for $50.00 per share in cash.

The Special Committee said at the time it had reviewed the Group’s indicative acquisition proposal, in consultation with its financial advisor and legal counsel, and had determined that the price proposed was “inadequate.”

The Wall Street Journal is reporting that Liverpool “owns the department stores Liverpool and Suburbia and operates franchise locations for brands that include Gap, Banana Republic, Williams Sonoma and Pottery Barn in Mexico.”

Liverpool currently owns approximately 10 percent of Nordstrom’s JWN shares. Members of the Nordstrom family reportedly own over 30 percent of JWN shares. The Journal stated that “following the proposed deal, the Nordstrom family would own 50.1 percent of the business, while Liverpool would own 49.9 percent.

The Board has reported that the proposal states that the merger consideration would be financed through a combination of rollover equity and cash commitments by members of the Nordstrom family and Liverpool and $250 million in new bank financing, with the existing indebtedness of the company to remain outstanding.

The special committee, composed of independent and disinterested directors, was reportedly formed in April in response to interest expressed by Erik Nordstrom and Pete Nordstrom in exploring a possible transaction. The special committee and the other independent directors are expected to review the proposal in consultation with independent financial and legal advisors to determine the course of action that is in the best interests of Nordstrom and all shareholders. No action is required by Nordstrom shareholders at this time.

“There can be no assurance that the company will pursue this transaction or other strategic outcome, or that a proposed transaction will be approved or consummated,” the company said in a media release. “The company does not intend to disclose further developments regarding this matter unless and until further disclosure is determined to be appropriate or necessary.”

Nordstrom had reportedly received interest from buyout equity firm Sycamore Partners in May, according to early reporting from Reuters, citing “people familiar with the matter.” Sycamore, rumored in recent takeover bids for Macy’s, Inc. and JCPenney, acquired privately-held Belk Department Stores in 2015 in a $3.0 billion deal for the largest family-owned and operated department store in the U.S. at the time. In 2020, it was rumored that Sycamore Partners would merge JCPenney with Belk in the JCP effort.

This effort by the Nordstrom family is the latest of a long line of efforts by companies, and especially retailers, that are looking at the economies of the retail landscape as problematic in the public markets. The retailers know that any turnaround effort will need to be a long-term solution, while Wall Street is famously focused on ninety day results.

Morgan Stanley & Co. LLC and Centerview Partners LLC are acting as financial advisors to the special committee, and Sidley Austin LLP and Perkins Coie LLP are acting as legal counsel.

Image courtesy Nordstrom, Inc.