The Nordstrom family group has offered $3.8 billion to take the department store chain private, bringing the store group back into the family’s hands.
To help finance the deal, CEO Erik Nordstrom and his brother, President Pete Nordstrom, have made the offer in conjunction with other members of the family plus Mexico-based retail and real estate conglomerate El Puerto de Liverpool.
In a statement Nordstom said: “The special committee of the board of directors of Nordstrom, Inc. have confirmed receipt of a proposal from Erik and Pete Nordstrom, other members of the Nordstrom family, and El Puerto de Liverpool to acquire all of the outstanding shares of the company, other than shares held by members of the Nordstrom family and Liverpool, for $23.00 per share in cash.”
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 debt held by the company to remain outstanding.
The special committee, composed of independent and disinterested directors, was formed in response to interest expressed by Erik and Pete Nordstrom in exploring a possible transaction.
The statement continued: “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.”
Nordstrom Ahead Of Expectations
Just last week, Nordstrom, reported second quarter net earnings of $122 million, and earnings before interest and taxes of $190 million.
For the second quarter ended August 3, net sales increased 3.4% versus the same period in fiscal 2023, and total company comparable sales increased 1.9%. During the quarter, Nordstrom banner net sales and comparable sales each increased 0.9% while net sales for Nordstrom Rack increased 8.8% and comparable sales increased 4.1%.
The results were ahead of Wall Street expectations and saw the share price have a brief rally, though estimates for the full year were broadly flat.
Nordstrom has previously said that it was focusing on improving its supply chain and in the previous quarter added that the time for online orders to arrive was more than 5% faster and that it had driven higher conversion rates and lower returns.
Another key focus has been its off-price banner, Nordstrom Rack, which has helped bolster the company’s overall results. Nordstrom has expanded its Rack locations and has opened 11 new locations this fiscal year, with the company aiming to open at least 22 by the end of the year.
Nordstrom Stock Value
“Our second quarter results were solid, and we’re encouraged by the continued topline strength in both banners and the progress we’re making to expand gross margin and increase profitability,” said Erik Nordstrom, chief executive officer of Nordstrom, Inc., of the results. “We’re confident in our outlook for the remainder of the year and look forward to sustaining the momentum we’ve built as we execute on our 2024 priorities.”
Nordstrom’s stock value has increased steadily in the year to date, and is up 25% from the beginning of the year. However, the offer on the table sits at the current share price, with no premium. This is unusual, as it offers little upside to stock holders.
However, it is possible that many may choose to bank recent gains and the presence of El Puerto de Liverpool in the mix does suggest that the offer could yet improve to encourage shareholder buy-in.
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