What’s New
The Nordstrom department store chain is set to go private after the Nordstrom family announced on Monday that it had made a $6.25 billion deal to buy all remaining shares in the company alongside Mexican department store company El Puerto de Liverpool.
“For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” Nordstrom CEO Erik Nordstrom said 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.”
Why It Matters
Nordstrom, which has been in business for over a century, is among only a handful of U.S. luxury department store chains to stay in business as consumers increasingly rein in their discretionary spending and move toward online retailers for the purchases that they do make.
The family decided to go private because they believe that the company is undervalued on the stock market, according to Reuters. Nordstrom stock values have been declining since 2015.
A previous attempt by Nordstrom to go private failed in 2017 after the family was unable to secure financing with a private equity firm, according to CNBC.
Newsweek reached out for comment to Nordstrom via email on Monday night.
What To Know
Nordstrom was founded as shoe store Wallin & Nordstrom in 1901 by family patriarch John W. Nordstrom, a Swedish immigrant who started the company with money acquired by prospecting during the Klondike Gold Rush, and cofounder Carl Wallin, a Seattle shoemaker.
The company went public in 1971, about eight years after it expanded into a department store. It has been owned by the Nordstrom family during its entire existence, with members of the family taking corporate leadership roles during most of the company’s 123-year history.
John retired and sold the company to his sons Elmer and Everett in 1928, while son Lloyd joined the company in 1933. Wallin retired the following year and also sold his stake in the company to John’s sons.
The second generation eventually passed the company on to their sons Bruce, James, John and son-in-law Jack in 1968. The company renamed itself to just Nordstrom, went public and founded its Nordstrom Rack clearance stores a few years later.
Bruce, who played a key role in transforming Nordstrom from a regional department store chain into an upscale national brand, died earlier this year at the age of 90.
Erik, the company’s CEO, is the son of Bruce and the great-grandson of John W. Nordstrom. His brother Pete is president of Nordstrom, while third brother Blake Nordstrom was the company CEO from 2015 until his unexpected death in 2019.
What People Are Saying
Morningstar senior equity analyst David Swartz told Yahoo Finance that the Nordstrom family had made “a very good deal,” explaining that “investors just are not giving good valuations to department store companies right now.”
Swartz argued that the retailer’s Nordstrom Rack division would likely be “the future of the company,” as the discount chain is “probably better positioned for the type of retail market that we have today.”
What Happens Next
The transaction to go private is expected to close during the first half of 2025, at which point Nordstrom shares will be delisted from public trading. Shareholders will receive $24.25 per share in cash, which is a 42 percent premium over the stock’s value when reports of the deal first surfaced on March 18.
The Nordstrom family will retain a controlling 51 percent stake in the company when the deal is finalized, with El Puerto de Liverpool holding the other 49 percent. Erik and Pete are expected to continue as Nordstrom CEO and president, respectively.
Update 12/23/24, 9:34 p.m.: This article was updated with further information.
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