The Nordstrom family offered $3.8 billion to take the company private — a steep discount from a bid it made six years earlier as department stores continue to get slammed by dwindling mall traffic.
Brothers Erik and Pete Nordstrom – chief executive and president, respectively – are joining with Mexican department store chain El Puerto de Liverpool to offer $23 a share in cash to acquire all of the outstanding shares of the company.
The fresh takeout bid, revealed in a securities filing on Wednesday, values the retailer at less than half the family’s previous offer in 2018 of $8.4 billion — a $50-per-share bid that was rejected by the company’s board as too low at the time.
In a letter to the board of directors Erik said the Nordstrom family members own about 33.4% of the company’s outstanding common stock. The Seattle-based company operates about 350 stores, including its off-price chain Nordstrom Rack.
The Nordstrom family, which lost its patriarch Bruce at age 90 in May, would own 50.1% of the company under terms of the deal. In 2019, Blake Nordstrom, who led the company with his brothers, passed away suddenly from lymphoma at age 58.
The family announced its aim to take the 123-year-old company private in March and the retailer’s board formed a special committee at the time to evaluate the plan.
“The special committee and the other independent directors will carefully review the proposal in consultation with independent financial and legal advisors to determine the course of action that is in the best interests of Nordstrom and all shareholders,” Nordstrom said in a Wednesday statement.
Nordstrom didn’t immediately respond to a request for additional comment.
Department store sales have dropped sharply over the past decade, pressuring consolidation in the sector. This summer, Saks Fifth Avenue parent HBC announced a deal to acquire luxury rival Neiman Marcus for $2.65 billion, which includes a minority investment from Amazon. The deal is pending regulatory approval.
Meanwhile, Macy’s lately has faced pressure from activist investors to sell itself or go private amid declining sales.
Nordstrom, which got it start in 1901 as a shoe store in Seattle, is lately seeing improvement in its financial performance. The company said its revenues in the second quarter grew by 3.4% to $3.9 billion and comparable sales increased by 1.9% versus a year ago.
“That the Nordstrom family have made an offer to buy the department store chain comes as no surprise. What is interesting is the $23 a share value which is pretty much the current price of the stock,” said Neil Saunders, managing director of GlobalData.
“The lack of any real premium would, under normal circumstances, make the offer unattractive. However, as a family-run firm the dynamics are slightly different, and it will be up to an independent committee to determine whether this is in the best interests of the company and its investors.”
The involvement of Liverpool in the deal, “may mean there is potential to push the price higher – something the committee may well consider,” Saunders added.
Shares of the company were down by less than 1% in late morning trading.
