Members of the Nordstrom family are exploring the possibility of taking Nordstrom Inc. private.
The
Wall Street Journal
said
the move signals “that they are ready to double down on the business at a time when many investors see a bleak future for the American department store.”
Six Nordstrom heirs are considering acquiring the 70% of the company they don't already own. “Assuming a typical takeover premium and including the company's debt, such a deal could approach $10 billion,” the
Journal
article said.
Arthur Questrom, former CEO of Neiman Marcus Group Inc., Macy's Inc. and J.C. Penney Co., told the
Journal
that the family would be making a long-term bet on the future of retailing. “Sometimes you can't make your numbers in the short term, but you want your brand to be around in 50 years,” Questrom said.
Observers told the
Journal
that because of the family's large stake, the company's real estate holdings and the relative health of the business, it would not be difficult for them to find a financing partner for the buyout.
The family group exploring the move consists of third-generation chairman emeritus Bruce Nordstrom, who owns 15.4% of the company; his sister, Anne Gittinger, who owns 9.2%; co-presidents Blake, Peter and Erik Nordstrom; and James Nordstrom, who is president of stores. Together, these family members own about 31.2% of the company's outstanding stock.
The group has not yet made a proposal, but the board has formed a special committee of independent directors and has hired financial advisers to consider any offer.
Kathy Gersch, a former Nordstrom executive who now works at management consulting firm Kotter International, told the
Journal
the move would be different from a standard leveraged buyout. “It's really the family buying back their company,” Gersch said. “It allows for a level of alignment that you don't get in a standard buyout.”
Forbes.com contributor Richard Kestenbaum noted
that the family would risk destroying their legacy if they were to default on the debt incurred to finance the purchase of the public shares. In addition, he wrote, the debt would mean less available capital for store renovation and expansion. Further, Kestenbaum noted, once the Nordstroms make a bid for the public shares, they risk losing the company to another bidder who might make a higher offer.
A
USA Today
report said
Nordstrom first offered its shares to the public in 1971. The company operates 122 full-line department stores in North America and 221 Nordstrom Rack stores, which offer discounted merchandise. About 23% of the company's business comes from online sales, which is up from 5% a decade ago but still puts the company at risk in today's market, the
USA Today
article said. (Sources:
Wall Street Journal
, June 9, 2017; Forbes.com, June 8, 2017;
USA Today,
June 8, 2017.)
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