In Partnership with Mexico’s Liverpool, Nordstrom Aims to Regain Control Amid Sales Challenges
Nordstrom’s (JWN) founding family has renewed its efforts to take the iconic department store chain private, this time offering $23 per share in a bid that values the company at approximately $3.76 billion. The bid, revealed in a regulatory filing on Wednesday, is the latest move by the family, which has teamed up with Mexico-based high-end retailer El Puerto de Liverpool in its attempt to regain full control of the company.
A Longstanding Interest in Taking Nordstrom Private
The Nordstrom family, which includes CEO Erik Nordstrom and President Peter Nordstrom, has long been interested in taking the company private. Together, the family and Liverpool already own nearly 44% of Nordstrom’s shares. The latest offer marks a significant drop from the $50 per share bid the family made in 2018, which was rejected by the company as being too low. Despite the lower price, the bid comes at a time when Nordstrom’s profitability and valuation have declined, creating an opportune moment for the family to make its move.
The proposal sent by the Nordstrom family and Liverpool is currently non-binding, with the potential for changes to the terms as discussions continue. The offer has led to a 35% increase in Nordstrom’s share price since Reuters first reported the family’s renewed interest in March 2024.
Strategic Partnership with El Puerto de Liverpool
El Puerto de Liverpool, a prominent Mexican department store chain, first acquired a stake in Nordstrom in 2022. This acquisition prompted the Nordstrom family to invoke a “poison pill” strategy to prevent a hostile takeover. Now, Liverpool has joined forces with the Nordstrom family in a bid to take the company private, reflecting a shared vision for the future of the retailer.
The partnership with Liverpool is particularly noteworthy as it underscores the Nordstrom family’s desire to maintain control of the company amid ongoing efforts to revitalize its business. The proposed deal would be financed through a combination of rollover equity, cash from the Nordstrom family and Liverpool, and $250 million in new bank financing.
Nordstrom’s Struggles and Turnaround Efforts
Founded in 1901 by John Nordstrom, the great-grandfather of the current CEO and president, Nordstrom has faced significant challenges in recent years. Since 2018, the company has seen its sales decline, exacerbated by the COVID-19 pandemic and strategic missteps. However, Nordstrom’s sales have recently outpaced those of competitors like Macy’s and Kohl’s, thanks to a renewed focus on stocking trendier products that appeal to modern consumers.
Despite these improvements, the company remains in a vulnerable position. Morningstar analyst David Swartz noted that the current bid comes at a time when Nordstrom’s profitability and valuation are low, making it a potentially attractive opportunity for the founding family to take the company private. However, Swartz also expressed skepticism about the offer, questioning whether the family and Liverpool could afford to make a higher bid without additional partners.
The Road Ahead: Potential for Change
While the current bid is a significant step, the Nordstrom family is reportedly in talks with other third parties regarding the offer. These discussions could lead to changes in the terms of the transaction, potentially resulting in a more favorable deal for shareholders.
The Nordstrom family’s bid is not the only recent interest in taking the company private. In May, Reuters reported that private equity firm Sycamore Partners had also expressed interest in acquiring Nordstrom. Whether Sycamore or other potential buyers will challenge the Nordstrom family’s bid remains to be seen.
As Nordstrom navigates its way through a challenging retail environment, the founding family’s renewed effort to take the company private highlights their commitment to steering the company back to its former glory. With the backing of El Puerto de Liverpool, the Nordstrom family’s bid marks a critical moment in the retailer’s history, potentially paving the way for a new chapter in its long and storied legacy.
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