Nordstrom Family Proposes Privatization Plan

Nordstrom Inc. (Seattle) executives Erik and Pete Nordstrom, along with other members of their family, have proposed teaming with retailer El Puerto de Liverpool (Mexico City) to acquire all the outstanding shares of the department store operator they don’t already own for $23 per share in cash. A special board committee of Nordstrom Inc. (Seattle) created to evaluate such proposals confirmed receipt of that plan.

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.

The special committee, composed of independent and disinterested directors, was formed in April in response to interest expressed by Erik and Pete Nordstrom, its CEO and President, respectively, in exploring a possible transaction. The special committee said it and the other independent directors will 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.

In its coverage of the proposal, The Seattle Times noted that the share price offered by the family and Liverpool doesn’t represent a significant premium over what Nordstrom’s stock is currently trading at, due at least in part to the company being in a revival mode. The Nordstroms and Liverpool are committing cash and equity to the deal, valued at nearly $3.8 billion, the Times reported, along with the previously mentioned $250 million in new financing to purchase shares from all investors.

The coalition of Nordstrom family members and Liverpool are proposing a deal in which the family would own 50.1% of the company, while Liverpool would own the rest, according to a regulatory filing. Liverpool, which operates luxury department stores in Mexico, took a 9.6% stake in Nordstrom about two years ago, while the Nordstrom family collectively owns 30% stake in the company, the Times reports.

The bid is less than half of what the family offered in 2018, the newspaper noted, an offer the company’s board of directors ultimately rejected as too low at $50 per share.

In its release, the committee said, “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.”