Nordstrom’s Privatization Talks Are Over

The Nordstrom family has officially ended talks with a special committee advising Nordstrom’s board regarding the privatization of the brick-and-mortar retailer. Reports from CNBC on Tuesday (March 20) indicated the two parties were not able to find common ground on a price.

Nordstrom family members as a group own a little under a third of the company (31.2 percent). They’ve been looking to take the retailer private since around mid-2017. To reach that goal, the family appointed a special committee to evaluate its efforts and price the deal. Nordstrom’s board rebuffed a sale offer of $50 a share — ruling the buy price was too low. As recently as Monday and Tuesday of this week, the Nordstrom family was looking to put together a higher bid, sources familiar with the situation said.

Private equity firm Leonard Green and Partners offered a price, the financing of which would have relied on equity care of the firm, the Nordstrom family, third-party funding and traditional debt.

Unfortunately, lenders and investors have lately been wary of the retail market, as several leveraged buyouts in the segment have left behind a flood of bankruptcies and low-trading bonds. And the victims haven’t only been small, niche mall brands. Toys R Us, for example, an established brick-and-mortar player that was founded in 1948 by Charles Lazarus, recently announced the liquidation of its assets, with payments to suppliers and lenders hanging in the balance. The embattled toy retailer is currently seeking approval to stop over $450 million in payments to its suppliers.

Nordstrom had hoped to escape the capriciousness of the public markets — not to mention the glare of the spotlight on its earnings each quarter — and free up the company to make longer-term investments.

The Nordstrom family had specifically hoped that, after going private, the company could further its digital investments and focus on realigning its store footprint, sources told CNBC. For now, however, those privatization prospects seem bleak.


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