The Nordstrom family has offered $3.8 billion to take the company private, a sharp drop from the offer they made six years ago as mall traffic dwindled and department stores continued to take a hit.
Brothers Eric Nordstrom, CEO and Pete Nordstrom's president, are partnering with Mexican department store chain El Puerto de Liverpool to acquire all of the company's outstanding stock for $23 per share in cash.
The new offer, revealed in a securities filing on Wednesday, values the retailer at less than half the $8.4 billion the family offered in 2018. A $50 per share offer was rejected by the company's board at the time as too low.
In a letter to the board, Eric said the Nordstrom family owns about 33.4% of the company's outstanding common stock. The Seattle-based company operates about 350 stores, including the off-price chain Nordstrom Rack.
Under the terms of the deal, the Nordstrom family, whose patriarch Bruce Nordstrom died in May at age 90, will own 50.1% of the company. In 2019, Blake Nordstrom, who led the company with his brothers, died suddenly of lymphoma at age 58.
The family announced plans to take the 123-year-old company private in March, and at the time the retailer's board of directors created a special committee to evaluate the plan.
“The special committee and our other independent directors, in consultation with our independent financial and legal advisors, will carefully consider the proposal and determine the best course of action for Nordstrom and all of our stockholders,” Nordstrom said in a statement on Wednesday.
Nordstrom did not immediately respond to a request for additional comment.
Department store sales have fallen sharply over the past decade, forcing the industry into consolidation. Saks Fifth Avenue's parent company, HBC, announced a deal this summer to buy luxury rival Neiman Marcus for $2.65 billion, which also includes a minority investment from Amazon. The deal is pending regulatory approval.
Meanwhile, Macy's has recently faced pressure from activist investors to sell or take the company private amid declining sales.
Nordstrom, which was founded in 1901 as a shoe store in Seattle, has been doing better lately. The company said second-quarter revenue rose 3.4% to $3.9 billion, and same-store sales rose 1.9% from a year ago.
“It's not surprising that the Nordstrom family has made a bid for the department store chain. What's interesting is that the share price is $23 a share, roughly where it is today,” said Neil Saunders, managing director at GlobalData.
“Under normal circumstances, the offer would be unattractive as there is no substantial premium. However, as it is a family-owned business, the circumstances are slightly different. It will be up to the independent committee to determine whether this is in the best interests of the company and its investors.”
Liverpool's involvement in the deal “means the price could go even higher and that could be something the committee could consider”, Saunders added.
The company's shares were down less than 1% in late morning trading.
