OAN Staff James Meyers
12:05 PM – Monday, December 23, 2024
Department store chain Nordstrom will be acquired by its founding family and Mexican retailer Liverpool for $4 billion in an all-cash deal, going private at a time when high-end retailers are struggling with slower consumer demand.
The company’s “shareholders will receive $24.25 for each share they own,” Nordstrom said on Monday, an increase from a $23 offer made by the parties in September for shares they did not already own, representing a 42% premium on the company’s stock as of March 18th.
The Nordstrom family will retain majority ownership of the company with 50.1%, while the remaining 49.9% will be controlled by El Puerto de Liverpool, which is the second-largest department store retailer in Mexico.
“For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” Nordstrom CEO Erik Nordstrom said in a press release.
“Today marks an exciting new chapter for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future.”
The deal has a total enterprise value of $6.25 billion, including accumulated debt, and it is expected to be partly funded by up to $450 million in borrowings under a new $1.2 billion asset-based bank financing.
Meanwhile, the transaction is expected to be finalized in the first half of 2025, according to the company.
Nordstrom shares have fallen almost 70% from their all-time high in 2015 as the rise of e-commerce giants, such as Amazon, resulted in a change in consumer shopping habits. Higher input costs and supply-chain snags following the COVID-19 pandemic have pressured the company too.
The Nordstrom family had previously tried to take the company private in 2018 as well, offering $50 per share to buy the company, which at the time was valued at $8.4 billion.
However, the company’s board rejected the offer as inadequate. In September, the family tried once again, only this time teaming up with Liverpool to offer shareholders a deal per share at a valuation of $3.76 billion.
At the time of the proposal, the Nordstrom family owned about 54.6 million shares, or 33.4% stake in the company. Liverpool owned 15.8 million shares, or nearly 10% of the shares.
The chain was founded as a shoe store in 1901 by John Nordstrom, the great-grandfather of the current CEO and president, Erik Nordstrom. Nordstrom branched out to successfully become a luxury retailer that sells clothing, accessories, purses, shoes, and more, across more than 350 locations across the U.S.
Nordstrom also beat third-quarter revenue and profit estimates on the back of popular brands, including Hoka and Vuori.
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