Erik and Pete Nordstrom Offer $3.8 Billion to Buy the Retailer
The offer is in.
Brothers Erik and Pete Nordstrom, along with other members of the Nordstrom family and Mexican retailer Liverpool, have offered to acquire all of the outstanding shares of the company the group does not already own for $23 a share in cash for a total of $3.8 billion.
In pre-market trading, Nordstrom’s stock price was down $0.07, or 0.31 percent, to $22.75.
The offer was received by a special committee of the board of directors of Nordstrom Inc., which confirmed the receipt of it on Wednesday morning.
The proposal states that the merger consideration would be financed through a combination of rollover equity and cash commitments by members of the Nordstrom family and Liverpool and $250 million in new bank financing, with the existing indebtedness of the company to remain outstanding. Mexico’s Liverpool department store chain had a 9.63 percent stake in Nordstrom as of March 31, 2024. Liverpool first purchased Nordstrom stock in 2022.
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The special committee, composed of independent and disinterested directors, was formed in response to interest expressed by Erik and Pete Nordstrom earlier this year in exploring a possible transaction. Erik is chief executive officer of Nordstrom, and Pete is president and chief brand officer.
“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 said in its statement Wednesday.
“There can be no assurance that the company will pursue this transaction or other strategic outcome, or that a proposed transaction will be approved or consummated. The company does not intend to disclose further developments regarding this matter unless and until further disclosure is determined to be appropriate or necessary,” the committee stated.
The Nordstroms tried to take their company private in 2017, offering to pay $50 a share, or $8.4 billion, with the backing of Leonard Green & Partners. That offer was considered too low and rejected by a special committee of the board. Nordstrom’s market capitalization stands at about $3.75 billion.
Going private takes the Nordstroms out from under the constant glare of Wall Street, and enables them to eliminate the time and costs of producing quarterly reports, staging conference calls and meetings with investors. They’ll deal with less scrutiny, far fewer stakeholders and regulatory requirements, and can be more decisive with a smaller constituency to report to. They’ll have more time to focus on long-term strategy and spend time with their families. Private companies can be less transparent so competitors know less about what they’re up against.
Morgan Stanley & Co. LLC and Centerview Partners LLC are acting as financial advisors to the special committee, and Sidley Austin LLP and Perkins Coie LLP are acting as legal counsel.
