M&A

Nordstrom Rejects Buyout Bid as Inadequate

Members of Nordstrom's founding family have offered $8 billion to take it private and help it adapt to the "challenging retail landscape."
Matthew HellerMarch 7, 2018

Nordstrom has rejected a buyout bid from members of its founding family that was below its current share price, saying it will terminate any further discussions unless the buyout group substantially improves its offer.

The group, who are descendants of founder John W. Nordstrom, has offered to take the retailer private for $50 per share of the company that the family doesn’t own, plus the same price for 21% of the family’s current stake. The total value of the deal is roughly $8 billion.

In a statement Monday, the company said a special committee of the board had reviewed the offer and determined that the proposed price is inadequate.

“The special committee has directed its advisors and management not to provide further due diligence to the group,” it added. “Furthermore, unless the group can promptly and substantially improve the price it is proposing to pay for the company, the special committee intends to terminate discussions.”

In trading Tuesday, Nordstrom shares rose just over 1% to $52.49.

The buyout group also includes private-equity firm Leonard Green & Partners. In a letter to a special committee of the Nordstrom board , it had said its offer represented a premium of 24% to the stock’s closing price on June 7, the day before the family announced it would attempt to take Nordstrom private.

A go-private deal would give the company the flexibility it needs to “navigate a challenging retail landscape at a critical time when the public market for retail stocks is highly volatile and increasingly focused on short-term results and risks,” the letter stated.

As The Wall Street Journal reports, the deal would allow the family members to cash out about $550 million of their stake in Nordstrom. The shares are mostly held by Bruce Nordstrom, a grandson of the founder and a former CEO, and his sister Anne Gittinger.

“This should not a be a take under situation,” said Tony Scherrer, director of research at Nordstrom shareholder Smead Capital Management. “It seems like they want to pay a zero premium, and that seems like a tough place from which to negotiate.”