The family behind Nordstrom, one of the nation’s oldest department stores, is offering to take it private for $3.8 billion, the company announced in a regulatory filing Wednesday, as retailers struggle to navigate new shopping trends and their expensive store bases.
Eric Nordstrom, chief executive, and his brother Pete Nordstrom, executive vice president, are leading a group of investors proposing to acquire Nordstrom for $23 a share in cash. There are two The fourth generation Nordstrom’s to lead the store founded in Seattle in 1901. The offer is subject to shareholder approval.
Department stores are adjusting to customers who are spending less on discretionary purchases like the stores’ core categories, dresses and handbags. Rising prices, dwindling foot traffic in malls and a race to compete weigh on the sector. It leads some to integrate; Macy’s, the nation’s largest department store chain, is looking to shrink itself, with plans to close 150 stores over the next three years. Parent company of Saks Fifth Avenue July Announced plans to acquire Neiman Marcus in a $2.65 billion deal.
Nordstrom was thought to be better positioned to navigate the challenges facing retailers, given its premium real estate and reputation for high-touch customer service. But Nordstrom Rack struggled last year amid a poor performance in its off-price business, even as inflation-weary consumers looked for bargains.
Shares of Nordstrom are up 25 percent since the start of the year, but down about 27 percent over the past five years. The family’s offer is about a 35 percent premium to its closing price on March 18, a day before the news first leaked. Looking for a deal To acquire the company. But the offer is less than 1 percent higher than Tuesday’s closing price.
The retailer has formed a special committee of directors to evaluate the deal. The committee confirmed receipt of the proposal Wednesday, saying it would seek an outcome in the best interests of both Nordstrom and its shareholders.
“The lack of any real premium would, under normal circumstances, make the offer unattractive,” said Neil Saunders, managing director of consulting firm GlobalData Retail. “However, as a family-run firm, the dynamics are a little different.”
The Nordstrom family has proposed financing the deal with cash, their existing stake in the company and $250 million in bank financing. The buying group also includes Mexican real estate and department store company El Puerto de Liverpool, which announced a stake of about 10 percent in Nordstrom in 2022.
Nordstrom reported quarterly earnings last week that showed an increase in same-store sales, driven in part by improvements at Nordstrom Rack. The company has also slightly raised its estimate for the year. On a call with analysts, Erik Nordstrom said his company is making progress on its goals, which include improving both its namesake and off-price businesses.
was owned by the Nordstrom family is considered In 2017, private equity firm Leonard Green took the company private, as investors fled the department store sector. But financing such a deal proved difficult in that environment.
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