By Savyata Mishra and Juveria Tabassum

(Reuters) -The Nordstrom (NYSE:) family teamed up with Mexican retailer Liverpool to clinch a $4 billion deal to take iconic department store chain Nordstrom private, six years after a similar attempt fell short.

Nordstrom and rivals such as Macy’s (NYSE:) have become enticing takeover targets in recent years as sales have slowed and shares have slumped. The Nordstrom family has wanted to take the company private in part because it believes it is undervalued in the public markets after a 70% tumble since 2015, according to sources familiar with the matter.

Before Monday’s trading, the company had a forward price-to-earnings ratio of 12.20, far below the industry median of 20.5, according to data compiled by LSEG. Its operating margins over the past three years have averaged 3.7%, less than the peer median.

The deal, announced Monday at a value of $24.25 a share, will give the Nordstrom family majority ownership and a chance to strengthen the company’s fortunes without having to report financials to public shareholders. Nordstrom had rebuffed an offer from the family back in 2018 worth $8.4 billion, far more than the latest bid.

Talk of a deal re-emerged in March, when Reuters exclusively reported the family was making another attempt at taking the company private.

Nordstrom’s shares were down 1.6% on Monday.

Department stores have struggled to increase sales in the past few years as shoppers cut spending due to higher inflation, and as they shifted to off-price chains such as TJX (NYSE:). E-commerce giants such as Amazon.com (NASDAQ:) have also steadily grown market share, adding to the competition.

Higher input costs and supply-chain snags following the COVID-19 pandemic have also pressured the company.

In September, the family and El Puerto de Liverpool offered $23 a share for the 56% of Nordstrom they did not already own. A team-up with the Mexican retailer should reassure shareholders about the decisions the company makes going forward, emarketer analyst Suzy Davidkhanian said.

The acquisition, which was cleared by a special committee, gives majority ownership to the family, led by current CEO Erik Nordstrom and President Pete Nordstrom, the great-grandchildren of John Nordstrom, who founded the company in 1901.

The deal has an enterprise value of $6.25 billion, including debt, and will be partly funded through $450 million in borrowings under a new $1.2 billion asset-based bank financing.

It is expected to close in the first half of 2025, the company said.

“Given the board’s approval and lack of any (apparent) opposition, I believe that the deal will go through at the proposed price,” said Morningstar analyst David Swartz.

© Reuters. FILE PHOTO: The Nordstrom store is pictured in Broomfield, Colorado, February 23, 2017.REUTERS/Rick Wilking/File Photo

Morgan Stanley & Co (NYSE:) and Centerview Partners are acting as financial advisers to the special committee, and Moelis (NYSE:) & Company is acting as financial adviser to the Nordstrom family.

The sector has been a locus of deal activity in 2024. The parent company of Saks Fifth Avenue agreed to buy rival Neiman Marcus in July, the same month Macy’s scrapped talks with an investor group looking to buy the chain for nearly $7 billion.


Source link

Best Brokers

Unmatched trading fees, generous bonuses, top notch Regulation Frame.

T&Cs Apply

Risk disclosure: All investments involve a degree of risk of some kind. Trading financial derivative products comes with a high risk of losing money rapidly due to leverage.

Top-Tier Regulations. Unmatched Spreads and Commissions. Trading View is available.

T&Cs Apply

Financial Spread Trades and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.7% of retail investor accounts lose money when trading CFDs with this provider.

Modern and Intuitive Interfaces, Solid Regulatory Frame, and excellent Trading Fees.

T&Cs Apply
Risk warning: Trading derivatives is highly speculative, carries an inherent risk of loss and is not suitable for all investors. Before trading, you are strongly advised to read and ensure that you understand the relevant risk disclosures and warnings.

Highly Regulated. Low Spreads and Commissions. Vast Account Options.

T&Cs Apply

Risk Warning: Trading derivatives carries significant risks. It is not suitable for all investors and if you are a professional client, you could lose substantially more than your initial investment.