Erik and Peter Nordstrom Have Teamed with El Puerto de Liverpool to Take the Chain Private
The Nordstrom family has made an offer to acquire the Nordstrom department store chain for $23 per share in cash, aiming to take the company private in a deal valued at $3.8 billion.
Erik and Peter Nordstrom, great-grandsons of founder John Nordstrom, shared in a statement on Wednesday that they have been exploring ways to privatize the business. To facilitate this, the brothers have partnered with other family members and El Puerto de Liverpool, a Mexican department store chain, which acquired nearly 10 percent of Nordstrom two years ago.
The proposed transaction would be financed through a mix of equity and cash contributions from both family members and Liverpool, along with $250 million in new bank financing. Post-transaction, the Nordstrom family would hold a 50.1 percent stake, while Liverpool would own 49.9 percent. Liverpool operates 312 stores across Mexico.
According to the group, their offer represents a 34.8 percent premium over Nordstrom’s share price as of March 18, when reports of discussions first surfaced. Nordstrom shares have risen by 24 percent year-to-date, as of Tuesday’s close.
The board of directors at Nordstrom confirmed that they have received the offer and stated that a special committee, comprising “independent and disinterested directors,” will evaluate the proposal.
In an official statement, the committee elaborated, “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. No action is required by Nordstrom shareholders at this time.” The committee added that there is no guarantee of pursuing this transaction or any strategic outcome, nor of transaction approval or completion. They do not plan to disclose any further developments unless deemed appropriate or necessary.
In a separate statement, Puerto de Liverpool noted that its portion of the deal includes a capital investment of at least $1.2 billion, which will be funded through a combination of its own resources and financing.
The Nordstroms attempted to privatize their company in 2017 with a $50 per share offer, or $8.4 billion, backed by Leonard Green & Partners. This offer was deemed insufficient by the board’s special committee and was denied. Nordstrom’s market capitalization is currently around $3.75 billion. The transition to private ownership would lessen public scrutiny, decrease their number of stakeholders and regulatory needs, and allow the Nordstroms to focus more on long-term planning.