Holiday shopping and shipping are gaining momentum as Nordstrom, a storied department store with over a century of history, has agreed to a $6.25 billion acquisition by members of the Nordstrom family and the Mexican retail group El Puerto de Liverpool. This move comes amid increasing challenges faced by department stores due to stiff competition from discount retailers and e-commerce giants.
Under the agreement, Nordstrom shareholders will receive $24.25 per share, translating to a total payout of approximately $4 billion, which represents a significant 42% premium based on the stock’s value from March 18, the day before acquisition talks became public. In addition to the cash payout, the Nordstrom family will assume more than $2 billion in debt.
As the business transitions to a private ownership model, insiders believe the Nordstrom family could implement long-term strategies to revive the department store’s fortunes, which have struggled with sluggish sales for an extended period. Similar challenges have afflicted other publicly traded retailers like Macy’s and Kohl’s, which have been under pressure from investors to deliver higher returns while simultaneously battling competition from lower-price alternatives like Walmart and Amazon.
GlobalData analyst Neil Saunders highlighted the advantages of this transition, stating that while ownership changes alone won’t solve every issue, this new structure could empower the Nordstrom family to focus on sustainable growth without the immediate pressures of the public market. He noted that both the Nordstrom family and El Puerto de Liverpool possess the skills necessary to drive positive changes, emphasizing that they will manage the business with a retailer’s perspective rather than merely as a financial asset.
Following the announcement, shares of Nordstrom fell slightly by 36 cents, or 1.5%, bringing their trading price to $24.17.
The acquisition proposal, which surpasses the prior offer of $23 per share made in September, is set to authorize a special dividend of up to 25 cents per share based on the company’s cash reserves immediately before and depending on the closing of the deal. The agreement is anticipated to reach completion in the first half of 2025, after which Nordstrom’s shares will no longer be publicly available for trade.
With a unanimous approval from Nordstrom’s board of directors, Erik and Pete Nordstrom, who are part of the family that has led the company since it began as a shoe store in Seattle in 1901, are set to take on majority ownership. Currently, the company operates 381 Nordstrom and Nordstrom Rack stores across the U.S., having opened 23 new locations this year alone.
This acquisition represents a significant turning point for Nordstrom, providing an opportunity for rejuvenation in an evolving retail landscape. The focus on long-term strategies can potentially revitalize the brand, ensuring its legacy continues for future generations.