What's New
Nordstrom has reached a $6.25 billion buyout deal led by members of the Nordstrom family and Mexican retail giant El Puerto de Liverpool in an effort to take the retail chain private.
Why It Matters
The move marks a pivotal moment for the century-old department store chain as it grapples with fierce competition in an evolving retail sector.
The agreement comes amid a challenging period for traditional department stores, which face mounting pressure from discount chains like Walmart, fast-fashion players and e-commerce companies like Amazon.
Rivals such as Macy's and Kohl's have been forced to consider sweeping changes under pressure from investors, while Nordstrom's sales have largely stagnated over the past decade.
What To Know
Nordstrom has agreed to be acquired and taken private by Nordstrom family members and El Puerto de Liverpool in a $6.25 billion deal.
Shareholders of the Seattle-based retailer will receive $24.25 per share in cash, representing a 42 percent premium over the stock's value as of March 18, when reports of the deal first surfaced.
The acquisition also includes the assumption of over $2 billion in Nordstrom's debt, signaling a significant financial commitment from the buyers.
The Nordstrom family has long sought to regain full control of the business with a previous buyout attempt in 2017 falling through. However, Monday's announcement also tops the previous $23-per-share bid that the Nordstrom family and El Puerto de Liverpool made in September.
With this deal, the Nordstrom family and their partners aim to steer the company away from the short-term pressures of public markets and toward a more flexible private ownership model.
Nordstrom announced plans last year to shutter its Canadian operations, closing all stores in the country and cutting 2,500 jobs. The company's Canadian expansion originally began in 2012 with much fanfare.
Founded in 1901 as a Seattle shoe store, Nordstrom has since grown into a national retailer with 381 Nordstrom and Nordstrom Rack locations across the U.S. Despite recent challenges, the company has opened 23 new stores this year alone.
The deal comes after the death of Bruce Nordstrom, a retail executive who helped expand his family's Pacific Northwest department store chain into an upscale national brand. He died in May of this year at the age of 90.
What People Are Saying
Neil Saunders, Managing Director of GlobalData, in a note to clients said: "While a change in ownership does not automatically remedy all of the problems with the department store operation, it will allow the family and their backers to take a long-term view of the business and make necessary investments and changes away from the short-term scrutiny of public markets."
What Happens Next
While the future of Nordstrom under private ownership remains unclear, the transaction is expected to close in the first half of 2025, which will see Nordstrom's shares delisted from public trading.
In addition, Erik and Pete Nordstrom, fourth-generation family leaders, will continue at the helm with Erik serving as CEO and Pete as president.
This article includes reporting from The Associated Press.
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