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Nordstrom to evaluate founding family's interest in pursuing take-private deal

Published 04/18/2024, 04:38 PM
Updated 04/18/2024, 06:00 PM
© Reuters. FILE PHOTO: A Nordstrom store is pictured in New York, U.S., March 1, 2021.  REUTERS/Brendan McDermid/File Photo
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By Granth Vanaik

(Reuters) -Nordstrom said the founding family behind the department store chain had shown an interest in pursuing a potential go-private deal, prompting the company's board to form a special committee of independent directors to evaluate any proposal.

The move by CEO Erik Nordstrom (NYSE:JWN) and President Pete Nordstrom comes at a time when department store chains across the U.S. are grappling with weak sales as sticky inflation and elevated borrowing costs have led customers to rethink their discretionary spending.

The Seattle-based retailer said the committee would evaluate any proposals from other parties as well.

Nordstrom's shares were up 1.6% in extended trading, after closing up 4.4% at $18.74 on Thursday. The retailer had a market capitalization of about $3.06 billion, according to LSEG data.

"(They) are going to have to offer a pretty high price which is well above the current stock price for the deal to be accepted," said Morningstar analyst David Swartz.

Reuters had first reported in March, citing sources, that the founding family was looking to take the company private, six years after a similar attempt turned out to be unsuccessful.

In 2017, the company announced that the members of the family had formed a group to explore the possibilities of going private, including the acquisition of all outstanding shares of the company.

But the department store operator in 2018 rejected that bid worth $8.4 billion, saying it was low. It later ended discussions with the family, which had also found it difficult to arrange for debt financing after failing to agree on an acceptable price.

The founding family collectively owns about 30% of the company's outstanding shares, as of March 2024.

© Reuters. FILE PHOTO: A Nordstrom store is pictured in New York, U.S., March 1, 2021.  REUTERS/Brendan McDermid/File Photo

In a filing on Thursday, the company said that CEO Nordstrom, who has a 7.45% stake in the retailer, might seek a debt or equity financing to consummate one or more transactions.

Rival Macy's (NYSE:M) has also received several offers in recent months from its investors Arkhouse Management and Brigade Capital to be taken private.

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