The Nordstrom family enters into an agreement to take the retail chain private

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 a bid 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 stiff competition in an evolving retail sector.

The deal comes amid a challenging period for traditional department stores, which are facing increasing pressure from discount chains such as Walmart, fast-fashion players and e-commerce companies such as 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 over 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 to the stock’s value per share. March 18, when reports of the deal first surfaced.

The purchase 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 after a previous takeover attempt in 2017 fell through. However, Monday’s announcement also tops the previous bid of $23 per share. share that the Nordstrom family and El Puerto de Liverpool divested 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 towards a more flexible private ownership model.

Nordstrom announced plans last year to close its Canadian operations, closing all stores in the country and cutting 2,500 jobs. The company’s Canadian expansion initially 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 follows the death of Bruce Nordstrom, a retail executive who helped grow his family’s Pacific Northwest department store chain into an upscale national brand. He died in May this year at the age of 90.

What people say

Neil Saunders, CEO of GlobalData, in a note to clients said: “While a change of ownership will not automatically remedy all the problems with the department store’s operations, it will allow the family and their backers to take a longer-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, when Nordstrom’s stock will be delisted from public trading.

Additionally, Erik and Pete Nordstrom, fourth generation family leaders, will continue at the helm with Erik as CEO and Pete as President.

This article includes reporting from the Associated Press.