Century-old department store Nordstrom has agreed to be acquired and taken private by Nordstrom family members and a Mexican retail group in a $6.25 billion deal with the industry being squeezed by discount chains and other competition.
Public companies are under a lot more scrutiny and if private, the Nordstrom may have more leeway in reviving a department store chain that has been attempting to reinvigorate sales for years.
Nordstrom shareholders will receive $24.25 in cash for each share of Nordstrom common stock, or about $4 billion in all, representing a 42% premium on the company's stock as of March 18, when reports of a potential transaction was reported by the media.
The acquiring group will also pick up more than $2 billion in Nordstrom debt.
The traditional department stores have suffered in the face of withering competition from giants like Walmart and Target, as well as a host of fast-fashion bands and Amazon.com. Nordstrom rivals Macy's and Kohl's have been pressured by major investors to make huge changes in order to return more profit to shareholders.
Sales at Nordstrom have essentially flatlined over the past decade or so and it announced last year that it was closing all of its Canadian stores and cutting 2,500 jobs as it winds down operations in the country. Nordstrom first announced plans to expand to Canada in 2012 and opened its first store in Calgary at CF Chinook Centre in September 2014.
The offer announced Monday tops the previous $23-per-share bid that the Nordstrom family and Mexican retail group, El Puerto de Liverpool, made in September.
The board also plans to authorize a special dividend of up to 25 cents per share, based on Nordstrom’s cash on hand immediately prior to and contingent on the close of the transaction.
The deal is expected to close in the first half of 2025, at which time the company's shares will no longer trade publicly.
“While a change in ownership does not automatically remedy all of the problems with the department store operation, it will allow the family and their backers to take a long-term view of the business and make necessary investments and changes away from the short-term scrutiny of public markets,” wrote Neil Saunders, Managing Director of GlobalData, in a note to clients.
Nordstrom’s board of directors unanimously approved the the proposed transaction, with members Erik and Pete Nordstrom, part of the Nordstrom family taking over the company — recusing themselves from that vote.
Following the close of the transaction, the Nordstrom family will have a majority ownership stake in the company.