Nordstrom Inc. is going private in a $6.25 billion deal. The brand will be acquired by the Nordstrom family and the Mexican retail brand El Puerto de Liverpool.
The announcement comes a time when the global retail industry is witnessing shifting trends and many beloved brands such as Party City, and Big Lots have announced closures. Nordstrom starts a new chapter with the decision and, as per experts, the move will let the department store chain operate away from the scrutiny of public markets.
The Nordstrom family and El Puerto de Liverpool will acquire all outstanding shares of Nordstrom at $24.25 per share. This amounts to a total equity value of $4.2 billion. Taking into consideration the company's $2 billion in debt, the transaction’s value comes to $6.25 billion.
The brand's family will retain a majority ownership stake of 50.1%, while Liverpool will hold 49.9%. The deal is expected to be done in the first half of 2025. It requires approval from two-thirds of the family's shareholders, and a majority of non-family shareholders.
Nordstrom's decision to go private explored
Over the last five years, Nordstrom's stock price has fallen by 40%. However, it is in contrast to the fact that the brand also experienced an 80% rise in the Russell 1000 Index. The family reportedly believes that operating privately will enable them to make long-term investments and strategic decisions, without having to worry about the quarterly earnings reports, and other related matters that a public market demands.
Many believe this decision to go private has its roots in the brand's strategy to dodge the pressures of public markets.
As per reports, brand CEO Erik Nordstrom stated,
“This decision allows us to focus on ensuring Nordstrom thrives long into the future.”
A key partner in this acquisition deal, El Puerto de Liverpool, is one of Mexico’s largest retail chains. They have over 300 stores, and a notably growing e-commerce presence. The third quarter revenue of the retail chain was $2.3 billion.
For the brand, this acquisition is an opportunity to expand its footprint beyond Latin America. The company already operates franchises for global brands like Gap, Banana Republic, and Pottery Barn, among others, in Mexico.
As a private entity, the global company will have greater flexibility to address its challenges, and invest in growth areas. This includes expanding its e-commerce platform, developing its store network, and the Nordstrom Rack brand, the company’s off-price chain.
As the brand, with the fourth-generation leadership of Erik Nordstrom and Peter Nordstrom, heads toward closing the significant deal, the retail industry across the globe will watch if the move marks a new era for the brand.
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