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Erik, Pete and Jamie Nordstrom and other members of the founding family have succeeded in their effort to bring the retailer, established over a century ago by their forebear John W. Nordstrom, back under family control, in an all-cash transaction valued at about $6.25 billion.
The family group plus Mexican retail conglomerate El Puerto de Liverpool will acquire all the outstanding common shares they don't already own. The transaction is financed through a combination of rollover equity by the Nordstrom family and Liverpool; cash commitments by Liverpool; up to $450 million in borrowings under a new $1.2 billion ABL bank financing; and the company's cash on hand.
Debt will be mostly unchanged: the $2.7 billion principal of existing senior notes and long-term debt will remain outstanding. As part of the transaction, Nordstrom expects to secure existing senior notes and debentures with a second lien on its current assets and related collateral and a first lien on other assets (excluding real estate), per the release.
Following the closing, the Nordstrom family will be the majority owners of the company, and Liverpool will own 49.9%. Erik and Pete Nordstrom's great-grandfather launched the business as a shoe store in Seattle in 1901.
The deal is expected to close in the first half of 2025, subject to regulatory and other conditions. It still needs the approval of two-thirds of the holders of Nordstrom's common stock and of a majority of shareholders outside of the family, Liverpool, directors and other officers.
The company's common stockholders will receive $24.25 per share in cash, a premium of some 42% to the closing price on March 18. Once the deal closes, the board also plans to authorize a special dividend of up to 25 cents per share.
Four years ago, Erik Nordstrom took the reins as sole chief executive and Pete Nordstrom was named president and chief brand officer; Jamie Nordstrom is chief merchant as of last year. The department store's board of directors (with Erik and Pete Nordstrom recusing themselves) unanimously approved the transaction, according to a company press release.
In September, the Nordstroms and Liverpool offered $3.8 billion to make this move, and a special committee of the board was established to mull the proposal. Their success in following through will allow them to "take a long term view of the business and make necessary investments and changes away from the short term scrutiny of public markets," though it won't cure all ills, GlobalData Managing Director Neil Saunders said by email.
The department store is hardly the worst performer in its sector, but it hasn't measured up to its own past standards in merchandising and operations, including store operations, according to Saunders.