Nordstrom’s Founding Family Offers to Take Company Private

By Ananya Mariam Rajesh

(Reuters) – Nordstrom’s founding family has proposed to take the department store chain private for $23 a share, in collaboration with a Mexico-based retailer, as revealed in a filing on Wednesday.

This price values the company at approximately $3.76 billion. Since March, when Reuters first disclosed the family’s interest in privatizing Nordstrom (NYSE:JWN), the company’s shares have surged 35%.

The bidders include CEO Erik Nordstrom, President Peter Nordstrom, and the Mexican retailer El Puerto de Liverpool, who sent a non-binding letter proposing the creation of a new entity to purchase the chain. Together, they own nearly 44% of the company. The Mexican high-end department store chain first acquired a stake in 2022, prompting the Nordstrom family to invoke a poison pill at that time.

The latest offer marks a sharp decrease from the $50 per share bid made by the founding family in 2018, which was rejected by Nordstrom due to being deemed too low, leading to the cessation of negotiations.

Morningstar analyst David Swartz commented, “(The group) is buying the company at a time when the profitability is low and the valuation is low.” He also noted that this bid indicates the Nordstrom family wants to retain control amidst ongoing turnaround efforts.

Founded in 1901 by John Nordstrom, the company has experienced declining sales since 2018 due to pandemic setbacks and strategy errors. However, recent sales have outperformed rivals like Macy’s (NYSE:M) and Kohl’s (NYSE:KSS), thanks to a focus on stocking more trendy items.

In addition, the founding family is in discussions with other third parties about the offer, which may lead to adjustments in the transaction’s current terms. Swartz stated, “I don’t think this is a very attractive offer… don’t know if they have the ability to offer a much higher price without bringing in another partner.”

The financing for the deal would involve a mix of rollover equity and cash from the Nordstrom family and Liverpool, as well as $250 million in new bank financing.

In May, Reuters also reported that Sycamore Partners had expressed interest in taking the company private.