Nordstrom is going private in a $6.25 billion deal with the Nordstrom family and a Mexican retailer

Century-old department store Nordstrom has agreed to be acquired and taken private by Nordstrom family members and a Mexican retailer in a $6.25 billion deal, as department stores face pressure from discount chains and other competition.

Nordstrom shareholders will receive $24.25 in cash for each Nordstrom common share, totaling about $4 billion. This represents a 42% premium to the company’s shares as of March 18, when the media reported a possible deal. The Nordstroms will also take on more than $2 billion in debt.

As a private company, the Nordstroms may have more leeway in reviving a department store chain that, like others, has been trying to revive lackluster sales for years. Other publicly traded retailers, including Macy’s and Kohl’s, have been under pressure from big investors to offer investors higher returns while trying to fend off competition from lower-cost rivals such as Walmart and Amazon.com.

“While a change in ownership does not automatically resolve all problems with the department store operation, it allows the family and its supporters to take a long-term view of the business and make necessary investments and changes without short-term considerations in the public markets,” noted GlobalData analyst Neil Saunders in a statement Research note from Monday.

He added: “The (Nordstrom) family has the talent and ability to bring about change, as does El Puerto de Liverpool. They’re likely to run the company as a retailer rather than as some kind of financial play, which we think is a concern. “That’s very positive for the long-term health of the brand.”

Shares of Nordstrom fell 36 cents, or 1.5%, to $24.17 in late morning trading.

Nordstrom family, El Puerto de Liverpool’s offer

The offer announced on Monday exceeds that previous bid of $23 per share that the Nordstrom family and Mexican retailer El Puerto de Liverpool made in September.

The board also plans to authorize a special dividend of up to 25 cents per share, based on Nordstrom’s cash balance immediately prior to and contingent on the closing of the transaction.

The transaction is expected to close in the first half of 2025. At this point, the company’s shares will no longer be publicly traded.

Nordstrom’s board unanimously approved the proposed transaction, with members Erik and Pete Nordstrom, part of the Nordstrom family, taking over the company – and recusing themselves from that vote.

Once the transaction closes, the Nordstrom family will hold a majority stake in the company. Erik and Pete Nordstrom are the fourth generation to lead the Seattle retailer, which was founded in 1901 as a shoe store. Erik is the company’s managing director and Peter is president.

After opening 23 new stores so far this year, the company now operates a total of 381 Nordstrom and Nordstrom Rack stores across the United States