- The Nordstrom family, along with Mexican retail chain El Puerto de Liverpool, has proposed a $3.8B privatization deal at $23 per public share.
- This is the second time the famous family has tried to take the Nordstrom chain of department stores private, following a failed 2018 bid.
- Overall, U.S. department stores face stiff competition from discount retailers and e-commerce, with many considering monetizing real estate or going private to restructure.
Nordstrom’s founding family, led by CEO Erik Nordstrom and President Pete Nordstrom, has made another attempt to take the storied department store chain (JWN) private, as reported by CoStar.
This bid follows an earlier failed attempt in 2018. Like other department store chains, Nordstrom is grappling with flagging sales and stiff competition from e-commerce and discount retailers.
Second Time’s The Charm
For the second time in recent memory, Nordstrom’s family has expressed interest in taking the company private. Partnering with Mexican retailer El Puerto de Liverpool, the family offered $23 per share in a deal valued at $3.8B.
A special committee of independent directors was formed again in April to evaluate the deal. The first bid was rejected in 2018 when the former committee considered a $50 per share offer inadequate.
The current, significantly lower bid involves financing from both the Nordstrom family and El Puerto de Liverpool, which has held a nearly 10% stake in the retailer since 2022. The deal includes $250M in bank financing. If successful, the family would hold 50.1% ownership, with Liverpool owning 49.9%.
Department Store Difficulties
Traditional department stores like Nordstrom, Macy’s (M), and Saks Fifth Avenue are facing fierce competition from discount chains, online retailers, and luxury brands.
Many struggling department chains are exploring new ways to boost profits, such as by going private or monetizing real estate. Macy’s, for example, recently rejected several privatization bids and has instead focused on selling its surplus properties.
Meanwhile, Nordstrom’s 350 physical locations, including its flagship store in Seattle, could also be evaluated for real estate value if the company goes private, potentially leading to a similar restructuring.
Zooming Out
The value of Nordstrom’s current offer is roughly equal to the company’s current stock price, which could make it unattractive to the board. However, El Puerto de Liverpool’s involvement could drive the price higher.
The bid comes as Nordstrom continues to struggle with slipping sales at its core department stores, though its off-price Rack division has shown promising growth. Total revenue for Nordstrom stores in the most recent quarter still reached $3.34B, thanks in part to Rack.
What’s Next
If accepted, the Nordstrom family’s latest privatization bid would mark a significant restructuring for the retailer as it seeks to navigate a rapidly evolving retail landscape. The board’s decision will likely hinge on whether they see the potential for a higher offer or more long-term benefits from staying public.
