Nordstrom considers taking the company private

Pete and Erik Nordstrom want to take their luxury department store chain private.

With financial support from their family and Mexican department store chain El Puerto de Liverpool, the family is offering $23 a share. The goal is to collectively own 50.1% of the company, according to a regulatory filing on Wednesday. Liverpool would hold the remaining shares.

According to the Seattle Times, the proposed deal is valued at nearly $3.8 billion. It includes cash and equity contributions from the Nordstroms and Liverpool, along with $250 million in new bank financing to buy out existing shareholders.

Nordstrom Rack: Sales grow as shoppers seek discounts, giving hope to Seattle-based company

Nordstrom’s board of directors announced that its special committee, formed in April in response to the Nordstrom brothers’ interest in privatization, has received the offer. The committee, along with other independent directors, will review the proposal with the help of financial and legal advisors to determine the best course of action for the company and its shareholders. No immediate action is required from shareholders.

Overall, while privatization could provide Nordstrom with more flexibility and focus, it will still need to navigate the broader challenges of the retail industry to succeed. Privatizing Nordstrom could have several impacts on its operations:

1. Reduced Public Scrutiny: As a private company, Nordstrom would no longer be subject to the same level of scrutiny from Wall Street and public investors. According to Women’s Wear Daily, this could allow the company to make long-term strategic decisions without the pressure of quarterly earnings reports.
2. Operational Flexibility: With fewer regulatory requirements and stakeholders to answer to, Nordstrom could potentially streamline its decision-making processes. This might enable quicker responses to market changes and more innovative strategies.
3. Cost Savings: Eliminating the costs associated with being a public company, such as compliance and investor relations expenses, could free up resources for other operational needs.
4. Focus on Core Business: Morningstar explained the Nordstrom family and Liverpool might prioritize investments in key areas like e-commerce, private-label products, and the expansion of Nordstrom Rack, which could help the company better compete in the retail market.
5. Potential Challenges: Despite these benefits, privatization doesn’t guarantee a solution to all of Nordstrom’s challenges. GlobalData reports the company still faces competitive pressures and the need to adapt to changing consumer behaviors.

Related news: Bruce Nordstrom, who helped grow family-led department store chain, dies at 90

Erik and Peter Nordstrom, the company’s CEO and president, are the great-grandsons of founder John W. Nordstrom, who started the business as a shoe store in 1901. The brothers cited their father Bruce Nordstrom’s health as a reason for wanting to take the company private earlier this year. Bruce Nordstrom, the former chairman who led the company through significant growth, passed away in May at the age of 90.

Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, here and email him here.