Nordstrom, a historic department store with over a century of operations, has reached an agreement to be acquired by family members of the Nordstrom family and a Mexican retail group, El Puerto de Liverpool, in a $6.25 billion transaction. This move comes amid increasing challenges facing department stores, which are under pressure from discount retailers and online competitors.
As part of the deal, Nordstrom shareholders are set to receive $24.25 in cash for each share they hold, totaling roughly $4 billion. This sale price reflects a 42% premium based on the stock price from March 18, just before news of the acquisition began circulating. Additionally, the Nordstrom family will take on over $2 billion in company debt.
The transaction’s transition to private ownership may offer the Nordstroms the agility needed to revitalize a struggling department store brand. Unlike publicly traded competitors like Macy’s and Kohl’s, which have faced intense pressure from investors for short-term gains while contending with lower-cost rivals such as Walmart and Amazon, the Nordstroms will have the opportunity to focus on long-term strategies without the scrutiny of public markets. Industry analyst Neil Saunders remarked that this change could foster a healthier retail environment for Nordstrom, allowing the family to leverage their expertise to enact meaningful changes.
The current stock of Nordstrom saw a slight dip following the announcement, falling 36 cents, or 1.5%, to $24.17. The new offer from the Nordstrom family and El Puerto de Liverpool surpasses a previous bid of $23 per share made in September.
The Nordstrom board has also signaled its intention to authorize a special dividend of up to 25 cents per share, dependent on the company’s cash reserves at the time of the transaction’s closure. The deal is expected to finalize in the first half of 2025, after which Nordstrom shares will be delisted from public trading.
Upon completion of the acquisition, Erik and Pete Nordstrom, fourth-generation leaders of the family, will have majority ownership. With the continuing expansion of its stores, including 23 new locations opened this year, Nordstrom currently operates a total of 381 Nordstrom and Nordstrom Rack stores across the United States.
This acquisition might herald a new era for Nordstrom, paving the way for strategic rethinking and potential innovation in the retail space. Ultimately, by returning to private ownership, the Nordstrom family may be well-positioned to navigate the evolving retail landscape and enhance the brand’s standing in a competitive market.