Nordstrom family secures $6.25 billion deal to take company private

Nordstrom is going private.

Erik, Pete and Jamie Nordstrom, along with the rest of the family, have joined with Mexican retailer El Puerto de Liverpool to buy the US department store chain. The deal priced shares at $24.25, with the all-cash transaction valued at $6.25 billion. The transaction is set to close in the first half of 2025, subject to regulatory approvals.

An acquisition bid was first proposed in September at $23 a share. Prior to the deal, the Nordstrom family owned 33.4 per cent of the company, while El Puerto de Liverpool bought a 9.6 per cent stake in the retailer in 2020 for $300 million. The Seattle-based company had been public since 1971.

“For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” said CEO Erik Nordstrom in a statement. “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 bid was approved by a special committee of Nordstrom board members after Erik and Pete Nordstrom recused themselves from the vote. It’s the second time that the Nordstrom family has made a bid to buy back the company from shareholders: seven years ago, a similar offer to take the company private priced shares at $50 each, but was rejected.

“Nordstrom is one of the worldwide leaders in department store retailing, and we’re thrilled to be investing in a company that has meaningfully shaped the industry for nearly 125 years,” said Graciano F Guichard G, executive chairman of Liverpool’s board of directors. The retailer has a significant e-commerce business, as well as more than 300 stores in Mexico.

Going private gives Nordstrom a chance to realign its strategy without reporting quarterly on progress as it prepares for the next phase of retail. The company has invested in both sides of the aisle, opening a massive New York City flagship and men’s stores in 2019 while expanding its e-commerce site to include a drop-shipping marketplace.

Wholesale retail has had a difficult and disruptive year, and department stores have been forced to cut costs, downsize and reposition themselves for a new landscape.

That resulted in significant changes: Saks is in the process of acquiring competitor Neiman Marcus, which also owns Bergdorf Goodman; the deal is expected to close in 2025 and would consolidate two leading retailers in the US. Activist investors are again pressuring Macy’s, which also owns Bloomingdale’s, to cut costs; the retailer shut down a $6.9 billion activist investor takeover in June. Online, Mytheresa and Net-a-Porter are in the process of merging, while Matches Fashion folded and Farfetch was sold to a Korean e-commerce company.

Nordstrom has held steady, even if it’s not as strong as in its heyday. The company reported losses of $39 million in the first quarter of 2024. By Q2, it posted earnings of $122 million. Shares are up 31 per cent year to date but have fallen 40 per cent in the last five years.

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