Nordstrom Family's $4 Billion Bet on Retail's Future

In a strategic move to regain its luster and secure long-term growth, the Nordstrom family has agreed to a $4 billion deal to take the iconic retailer private. The transaction, valued at approximately $6.25 billion, will see the Nordstrom family and Mexican retailer El Puerto de Liverpool acquire all outstanding shares, with the family retaining a 50.1% stake. This move comes as department stores face intense competition from discount chains and online retailers, and Nordstrom aims to break free from the short-term scrutiny of public markets.

The deal, approved unanimously by Nordstrom's board of directors, offers shareholders a significant premium of around 42% over the company's stock price as of March 18, 2024. Shareholders will receive $24.25 in cash for each share, along with a special dividend of up to $0.25 per share upon the transaction's completion. The deal is expected to close in the first half of 2025, at which point Nordstrom's shares will no longer trade publicly.

The Nordstrom family's majority ownership will likely prioritize long-term growth over short-term gains, allowing for increased investments in merchandising, store upgrades, and digital growth. GlobalData's Neil Saunders believes that the family's understanding of the business and retail expertise will drive strategic decisions, potentially reviving Nordstrom's luster. The partnership with El Puerto de Liverpool could also expand Nordstrom's brand offerings, as Liverpool might gain introductions to brands like Alo or Vuori through Nordstrom.



Going private will enable Nordstrom to focus on long-term growth strategies, free from the pressure of satisfying Wall Street every quarter. As a private company, Nordstrom will no longer be obligated to produce quarterly reports or stage conference calls with investors, saving time and money. This reduction in scrutiny will allow Nordstrom to make more decisive decisions with a smaller constituency to report to and be less transparent, keeping competitors in the dark about their strategies.

However, Nordstrom will take on more debt, with an enterprise value of $6.3 billion, including debt. The transaction will be 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 asset-back loan, and company cash on hand. Nordstrom currently has $2.7 billion in debt.

The Nordstrom family's $4 billion deal to take the retailer private is a bold move that could enhance Nordstrom's competitive position in the retail industry. By allowing the family and Liverpool to take a long-term view, free from quarterly Wall Street scrutiny, Nordstrom can focus on necessary investments and changes to adapt to evolving consumer preferences and market trends. However, Nordstrom will still face intense competition from other department stores and online retailers, such as Macy's, Kohl's, and Amazon. The success of this privatization will depend on Nordstrom's ability to innovate, adapt, and execute on its long-term strategic plans.