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Nordstrom family's bid to buy the retailer is rejected
[NEW YORK] Nordstrom's long, winding attempt to move into private ownership took another turn Monday. A special committee of the retailer's board rejected a roughly US$8.4 billion offer from the Nordstrom family to buy the company, saying the price was too low.
In a statement late Monday, the committee said the cash offer of US$50 a share was "inadequate," and it threatened to cut off further discussions with the family group, which includes the company's co-presidents and a granddaughter of one its founders.
"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," according to the statement. The committee also said it would not provide the family with any additional "due diligence" information.
It has been eight months since the family, which founded Nordstrom in Seattle more than a century ago, signalled that it wanted to take the company private. Known for its stylish high-end clothing and successful discount stores, Nordstrom has been seeking a respite from the public stock market and its harsh scrutiny of brick-and-mortar retailers.
In a letter to the special committee Monday, the family group said going private would "ensure that the company has the flexibility to successfully 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." Nordstrom has managed to avoid some of the pitfalls of other clothing and apparel stores by taking a conservative approach to opening new stores. But through the fall, the company still had trouble lining up financing to go private, as banks and other lenders waited to see how Nordstrom and other retailers weathered the holidays.
The company reported a strong Christmas shopping season with sales increasing, but profit fell as the company continued to invest in new initiatives.
On Monday, the family said it had received proposals from 10 lending firms to provide up to US$7.5 billion in debt financing. The family group also said it had received a commitment from the retail-focused private equity firm Leonard Green to provide up to US$2 billion in financing.
The family group that made the bid - including the company's co-presidents, Blake W. Nordstrom and Peter E. Nordstrom - owns about 30 percent of the shares.
The family emphasised that the US$50-a-share price represented a roughly 24 per cent premium over where the shares were trading before it announced its intention to go private in June.
The special committee, which includes the retailer's independent directors, was formed to lead an impartial sales process on behalf of shareholders who are not part of the family.
Nordstrom shares closed at US$51.90 on Monday.