DEFA14A: Nordstrom Addresses Shareholder Lawsuit and Provides Supplemental Disclosures Regarding Proposed Merger

Nordstrom is supplementing its definitive proxy statement related to its proposed merger with Norse Holdings, Inc. to address a shareholder lawsuit and shareholder letters alleging material omissions.

Summary

• Nordstrom has filed additional materials related to its proposed merger with Norse Holdings, Inc.
• This filing addresses a purported class action lawsuit (Gilbert Complaint) filed by a shareholder on March 31, 2025, alleging violations of fiduciary duties and the Washington Moratorium Statute.
• The company also received 15 letters from shareholders claiming material omissions in the Definitive Proxy Statement.
• Nordstrom believes no further disclosure is legally required but is providing supplemental disclosures to minimize litigation risks and expenses.
• The supplemental disclosures include amendments to sections regarding the opinions of Morgan Stanley & Co. LLC and Centerview Partners LLC, as well as unaudited prospective financial information.
• The Special Meeting to vote on the merger is scheduled for May 16, 2025.
• The court denied the plaintiff's motion for expedited discovery and subsequently denied the plaintiff's motion for preliminary injunction.
• The company intends to vigorously defend against the Gilbert Complaint and any future lawsuits.
• The merger agreement was originally entered into on December 22, 2024.
• The merger consideration is $24.25 per share.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company is facing a lawsuit and shareholder concerns, it is taking proactive steps to address them and proceed with the merger. The court's denial of the preliminary injunction is a positive sign.

Positives

• The court denied the plaintiff's motion for expedited discovery.
• The court denied the plaintiff's motion for preliminary injunction.
• Nordstrom is taking steps to address shareholder concerns and potential legal challenges.
• The Special Committee and Board are actively overseeing the transaction.
• The company is providing additional information to shareholders to ensure transparency.

Negatives

• A shareholder lawsuit has been filed, creating uncertainty and potential delays.
• Shareholders have raised concerns about the adequacy of disclosures.
• The merger faces potential legal challenges that could impact its completion.
• The company is incurring transaction-related costs associated with the merger and legal defense.

Risks

• The outcome of the Gilbert Complaint and any future lawsuits is uncertain.
• The merger could be delayed or adversely affected by legal proceedings.
• The company's stock price may fluctuate during the pendency of the merger.
• The merger may not be completed on the anticipated terms or timing.
• The company may be subject to lawsuits relating to the merger.
• The company's efforts to complete the merger could disrupt relationships with third parties and employees.
• The company may be unable to retain and hire key personnel.
• The company may face competitive responses to the merger.
• The company may face difficulties in obtaining necessary financing or having sufficient cash on hand to complete the merger or pay the full amount of the Special Dividend.
• The company may be impacted by legislative, regulatory and economic developments affecting its business.
• The company may be impacted by general economic and market developments and conditions.
• The company may be impacted by unpredictability and severity of catastrophic events.
• The receipt of cash in exchange for shares of Nordstrom Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes.

Future Outlook

The document contains forward-looking statements regarding the completion of the merger, which are subject to risks and uncertainties. Nordstrom undertakes no obligation to update these statements.

Management Comments

• Nordstrom believes that no further disclosure is required to supplement the Definitive Proxy Statement under applicable law.
• Nordstrom wishes to make supplemental disclosures related to the proposed Merger, in response to the Shareholder Letters, to avoid the risks and uncertainties inherent in litigation and the risk that lawsuits may delay or otherwise adversely affect the consummation of the proposed Merger and to minimize the expense of defending such actions.

Industry Context

The document references Macy's, Inc. as a comparable company in the financial analysis, highlighting the trend of potential acquisitions in the retail sector.

Comparison to Industry Standards

• The document uses standard financial analysis techniques such as public trading comparables analysis, discounted equity value analysis, and discounted cash flow analysis, which are common practices in evaluating mergers and acquisitions.
• The document references equity research analyst price targets for Nordstrom Common Stock, which is a common practice in evaluating mergers and acquisitions.
• The document references Macy's, Inc. as a comparable company in the financial analysis.
• The document uses a discount rate of 14.5% to reflect Nordstrom's cost of equity, which is a common practice in evaluating mergers and acquisitions.
• The document uses discount rates ranging from 11% to 13% to reflect Nordstrom's weighted average cost of capital, which is a common practice in evaluating mergers and acquisitions.

Legal Proceedings

• A shareholder lawsuit, Gilbert v. Nordstrom, Inc. et al., No. 2:25-cv-00568 (W.D. Wash. Mar. 31, 2025), has been filed against Nordstrom, Parent, Acquisition Sub, Liverpool, and the members of the Nordstrom Board.
• The Gilbert Complaint seeks a declaratory judgment that the Merger violates the Washington Moratorium Statute, an injunction preventing consummation of the Merger, findings that the members of the Board, Parent, Acquisition Sub, and Liverpool breached their fiduciary duties in connection with the Merger, and an award of damages and other relief.
• The Court denied the plaintiffs motion for expedited discovery.
• The Court denied the plaintiffs motion for preliminary injunction.
• Additional lawsuits arising out of the Merger may be filed in the future.

Stakeholder Impact

• Shareholders are being asked to vote on the proposed merger.
• Employees may be affected by the merger, including potential job losses or changes in roles.
• Customers may experience changes in the company's operations and offerings.
• The merger could impact the company's relationships with suppliers and other third parties.
• Shareholders (excluding the Family Group and Liverpool) will be unable to participate in any further upside of Nordstroms business if the Merger is consummated.

Next Steps

• Shareholders will vote on the merger at the Special Meeting on May 16, 2025.
• Nordstrom will continue to defend against the Gilbert Complaint and any future lawsuits.
• The company will seek to satisfy the remaining conditions to complete the merger.

Key Dates

Keywords

merger, Nordstrom, shareholder lawsuit, proxy statement, Norse Holdings, Acquisition Sub, Liverpool, Special Committee, financial analysis, litigation, disclosure