Nordstrom to be taken private by founding family for US$4B

A Nordstrom store in Pittsburgh, June 3, 2024. (AP Photo/Gene J. Puskar)

Nordstrom will be acquired by its founding family and Mexican retailer Liverpool for nearly US$4 billion in an all-cash deal, going private at a time when high-end retailers are grappling with slow demand.

The company's shareholders will get $24.25 for each share they own, Nordstrom said on Monday, an increase from a $23 offer made by the parties in September for shares they did not already own.

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The Nordstrom family and El Puerto de Liverpool together owned nearly 44 per cent of the company as of September.

Department store chains such as Nordstrom and Macy's have struggled to grow their sales as middle-income shoppers turned thrifty with essentials getting pricier, instead turning to cheaper alternatives at Walmart, Amazon.com and Target as well as off-price chains including TJX Cos.

Reuters exclusively reported on March 19 that the founding family was seeking to take Nordstrom private, six years after a similar attempt proved unsuccessful.

The news helped Nordstrom's stock bounce back from declines early in the year and gain 43 per cent since then. The offer price announced on Monday represents a 42 per cent premium to the stock's unaffected close on March 18.

Nordstrom had formed a special committee in February to respond to interest expressed by the family consisting of CEO Erik Nordstrom and president Pete Nordstrom to explore a possible deal.

The acquisition, which was cleared by the special committee, gives the family a majority ownership stake in the company.

"Given the board's approval and lack of any (apparent) opposition, I believe that the deal will go through at the proposed price," said Morningstar analyst David Swartz.

Nordstrom's shares were down nearly one per cent in early trade on Monday.

The deal has an enterprise value of $6.25 billion, including debt, and is expected to be partly funded by up to $450 million in borrowings under a new $1.2 billion asset-based bank financing.

The transaction is expected to close in the first half of 2025, the company said.

Morgan Stanley & Co and Centerview Partners are acting as financial advisors to the special committee, and Moelis & Company is acting as financial advisor to the Nordstrom family.

In July, Macy's scrapped talks with an investor group comprising Arkhouse Management and Brigade Capital that had offered to acquire the department store chain for $6.9 billion.

(Reporting by Savyata Mishra and Juveria Tabassum in Bengaluru; Editing by Sriraj Kalluvila and Devika Syamnath)