A deal that could see US department store giant Nordstrom go private has been approved by the board of directors, potentially allowing for the company’s namesake family to acquire all outstanding shares of the firm. The Nordstrom family, consisting of Erik, Pete, Jamie and other members, will come together with Mexican real estate company El Puerto de Liverpool, S.A.B. de C.V. (Liverpool) in a bid to secure the remaining shares of the firm in an all-cash transaction valued at around 6.25 billion dollars.

Upon the closure of the transaction, the Nordstrom family will return as the majority owners–holding 50.1 percent stake–of the company, which will then become private. Liverpool, meanwhile, will hold a 49.9 percent stake. As part of the deal, common shareholders will receive 24.25 dollars in cash for each share of common stock they hold, representing a premium of approximately 42 percent to the company’s closing common stock price on March 18, 2024. This was the last trading day prior to when media speculation regarding the proposed transaction began circulating.

Such rumours took over the media when it was reported that Nordstrom had hired investment banks to gauge interest in the shift to a private structure. A special committee was thus formed after Erik and Pete Nordstrom expressed interest in the potential sale, presenting an alternative to strategies that were being mulled, designed with the intention of enhancing shareholder value. At the time, the Nordstrom family held a 30 percent stake in the company.

Nordstrom family to become majority shareholders

The transaction has now received “unanimous approval” by Nordstrom’s board of directors–Erik and Pete recused themselves–as well as the recommendation of the special committee, which had led the review and negotiation. In a release, Erik, who currently serves as CEO of the retailer, said “today marks an exciting new chapter for the business”. He continued: “On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future."

In his own statement, Pete Nordstrom, chief brand officer, said: "We're grateful to the employees, customers and shareholders who have shaped Nordstrom into the company it is today. Since our founding in 1901, we have been committed to providing our customers with the best possible service – and to improving it every day. We look forward to building on that commitment in this next phase of the company's evolution."

Nordstrom said the transaction is expected to close in the first half of 2025, subject to regulatory and other conditions, including approval from two-thirds of the company’s common stock and majority shareholders. The transaction is to be financed through a combination of rollover equity by both the family and Liverpool, cash commitments by the letter, up to 450 million dollars in borrowings under a new 1.2 billion dollars ABL bank financing and company cash on hand.

Morgan Stanley & Co. LL and Centerview Partners LLC are acting as financial advisors to the special committee, while Wilmer Cutler Pickering Hale and Dorr LLP, Lane Powell PC and Davis Wright Tremaine LLP are acting as legal counsel to the Nordstrom Family. J.P. Morgan Securities LLC is acting as financial advisor to Liverpool.