The Nordstrom founding family’s plans to take the firm private have fallen through.
The special committee advising Nordstrom’s board for the potential transaction said Tuesday that it has terminated talks with the Nordstrom family after the two parties were unable to come to an agreement on price.
The final gavel slam comes just weeks after the special committee rejected the initial acquisition proposal of the group — comprising company co-presidents Blake Nordstrom, Peter Nordstrom and Erik B. Nordstrom; president of stores James Nordstrom; chairman emeritus Bruce Nordstrom; and Anne E. Gittinger — determining that the bid of $50 per share was “inadequate.”
“The special committee has directed its advisers and management not to provide further due diligence information to the group,” the board said in its statement on March 6, adding that it would terminate discussions with the family if it did not “promptly and substantially improve the price” it proposed to pay for the company.
Yesterday’s announcement shows the committee making good on that promise.
In a filing with the U.S. Securities and Exchange Commission on March 5, the Nordstrom family group had said its proposed purchase price would represent a premium of 24 percent over the firm’s share price of $40.48 as of June 7, 2017 — the stock price immediately prior to the public announcement of its intention to go private. The family had also noted that it received proposals from 10 major lending firms to provide up to $7.5 billion in debt financing to secure the deal. It also received a commitment from private equity firm Leonard Green to provide up to $2 billion in financing, the group noted.
In June, the Nordstrom family announced plans to find a private buyer for stocks of the company not owned by the family. At the time, the Nordstroms owned 51,830,957 shares, or an approximate 31.2 percent stake, of its common stock. In October, the family said it would suspend those plans until after the holiday season.
Armed with a stronger holiday performance, the founding family in January resumed its attempts to finance a take-private transaction.
Navigating turbulent retail waters as a public company under the highly critical gaze of shareholders has been a challenge for Nordstrom — which has outperformed many of its peers amid industrywide meltdowns — and many other publicly traded firms in recent years.
“Every move made by management to evolve the business is scrutinized by shareholders, and in some cases, longer-term strategic, innovative moves that require testing are not perceived as being of near-term benefit to shareholders,” B. Riley FBR analyst Jeff Van Sinderen told FN in September of Nordstrom’s go-private plans.
In terminating the discussion with the family group, Nordstrom’s special committee this week said it believed the publicly traded firm remains well-positioned to “gain market share through its customer strategy,” which focuses on “providing a differentiated product offering, delivering exceptional services and experiences, and leveraging the strength of its brand.”
The department store chain ended the trading day Tuesday with shares down a modest 0.02 percent to $49.35.