Century-old department store Nordstrom has agreed to a $6.25 billion acquisition, going private in a deal orchestrated by Nordstrom family members and Mexican retail group, El Puerto de Liverpool. This comes as the industry faces intense pressure from discount chains and other competitors. The move to private ownership may offer Nordstrom more freedom to implement long-term revitalization strategies, a challenge the company has faced for years under the scrutiny of public markets.
Nordstrom shareholders will receive $24.25 in cash per share, totaling approximately $4 billion—a 42% premium based on the March 18th stock price, preceding media reports of a potential deal. The acquiring group will also assume over $2 billion in Nordstrom debt. Traditional department stores have struggled against fierce competition from giants like Walmart and Target, fast-fashion brands, and Amazon. This pressure has also been felt by Nordstrom’s rivals, Macy’s and Kohl’s, facing investor demands for significant changes to boost profitability.
Nordstrom’s sales have plateaued for over a decade. Last year, the company announced the closure of all its Canadian stores and 2,500 job cuts, marking a retreat from a market it entered in 2012. Monday’s offer surpasses a previous $23-per-share bid from the Nordstrom family and El Puerto de Liverpool made last September. The board also approved a special dividend of up to 25 cents per share, contingent on the deal’s closure.
The transaction is expected to close in the first half of 2025, at which point Nordstrom shares will cease public trading. Neil Saunders, Managing Director of GlobalData, commented that while private ownership doesn’t automatically solve all the company’s problems, it allows for a long-term perspective and investment, free from the short-term pressures of public markets.
The Nordstrom board unanimously approved the deal, with family members Erik and Pete Nordstrom, who will lead the company, recusing themselves from the vote. Upon closing, the Nordstrom family will hold a majority stake. Erik and Pete, representing the fourth generation of leadership, are the company’s CEO and president, respectively. The Seattle-based retailer, founded in 1901 as a shoe store, currently operates 381 Nordstrom and Nordstrom Rack stores in the U.S. after opening 23 new locations this year.
Nordstrom shares experienced a slight 1.5% dip on Monday, but remain up 34% this year amidst takeover rumors. However, the stock price remains significantly below its post-pandemic highs above $40 per share. The deal follows the May passing of Bruce Nordstrom, a key figure in the company’s expansion, and builds upon a failed 2018 attempt by family members to take the company private.