8-K: Nordstrom Addresses Shareholder Lawsuits and Provides Supplemental Disclosures Regarding Proposed Merger

Nordstrom files an 8-K report addressing a shareholder lawsuit and providing supplemental disclosures related to its proposed merger with Norse Holdings, Inc.

Summary

• Nordstrom has filed a Form 8-K report addressing a shareholder lawsuit (Gilbert Complaint) and shareholder letters concerning alleged omissions in the definitive proxy statement related to the proposed merger with Norse Holdings, Inc.
• The company believes no further disclosure is legally required but is providing supplemental disclosures to minimize litigation risks and potential delays to the merger.
• The supplemental disclosures amend sections of the definitive proxy statement, including those related to the opinion of Morgan Stanley & Co.
• LLC and Centerview Partners LLC, unaudited prospective financial information, and other factors.
• 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 preliminary injunction.
• Nordstrom intends to vigorously defend against the Gilbert Complaint and any future lawsuits arising from the merger.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the merger is progressing, there are legal challenges and shareholder concerns that introduce uncertainty.

Positives

• The court denied the plaintiff's motion for a preliminary injunction, allowing the shareholder vote to proceed as scheduled.
• Nordstrom is taking proactive steps to address shareholder concerns and minimize potential disruptions to the merger.

Negatives

• A shareholder lawsuit has been filed, alleging violations of the Washington Moratorium Statute and breaches of fiduciary duties.
• The company has received multiple letters from shareholders claiming material omissions in the Definitive Proxy Statement.

Risks

• The outcome of the Gilbert Complaint and any future lawsuits is uncertain.
• The merger could be delayed or adversely affected by ongoing litigation.
• The company may incur substantial transaction-related costs in connection with the merger.
• The merger agreement contains provisions that limit Nordstrom's ability to pursue alternatives to the merger.
• The company's stock price may fluctuate during the pendency of the merger and may decline significantly if the merger is not consummated.

Future Outlook

The document contains forward-looking statements regarding the completion of the merger, which are subject to risks and uncertainties.

Management Comments

• Erik and Peter Nordstrom made clear to me and the other independent directors that they would pursue only a consensual transaction approved by the Special Committee and a majority of the unaffiliated shareholders, and I did not at any time view them as launching a hostile takeover against the wishes of the Board and the Special Committee Eric Sprunk
• The current transaction arose not from any hostile activity or third-party acquisition attempt, but from my own belief that the Company's next phase of growth would be best served in the private markets Erik Nordstrom
• From the outset, I was clear with the Board that Pete and I would only be interested in pursuing a consensual transaction that was not hostile to Nordstrom and that would be driven and approved by the Special Committee Erik Nordstrom
• Liverpool would not have continued with discussions or approved submission of a joint bid unless and until such approval was received from the Nordstrom Board and Special Committee Graciano F. Guichard Gonzlez

Industry Context

The take-private transaction reflects a trend of retailers seeking to restructure and invest in their businesses away from the scrutiny of public markets.

Comparison to Industry Standards

• The AV / CY2024E Adj. EBITDA and AV / CY2025E Adj. EBITDA multiples for Macys, Inc. were calculated as of December 8, 2023 (the last unaffected date for Macys, Inc.'s share price before news of investor interest in an acquisition of Macys, Inc.).
• Morgan Stanley selected a representative range of financial multiples for calendar years 2024 and 2025 of 3.5x to 5.0x and applied this range of multiples to Nordstrom's estimated adjusted earnings before interest, taxes, depreciation and amortization of intangible assets and amortization of developer reimbursements (Company Adj. EBITDA) for fiscal years 2024 and 2025 as set forth in the December Projections.
• Centerview selected a reference range of AV to Adj. EBITDA multiples of 4.0x to 5.0x for fiscal years 2024 and 2025.

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 in the United States District Court for the Western District of Washington.
• The Gilbert Complaint seeks (i) a declaratory judgment that the Merger violates the Washington Moratorium Statute because the Merger Proposal is not conditioned on the approval of holders of two-thirds of Nordstroms outstanding shares excluding the shares owned by the Parent Parties, (ii) an injunction preventing consummation of the Merger unless and until the Merger Proposal is approved by holders of two-thirds of Nordstroms outstanding shares excluding the shares owned by the Parent Parties, (iii) findings that the members of the Board, Parent, Acquisition Sub, and Liverpool breached their fiduciary duties in connection with the Merger, which the Gilbert Complaint alleges was unfair, and (iv) an award of damages and other relief.

Stakeholder Impact

• Shareholders are being asked to vote on the proposed merger.
• Employees, customers, and other third parties who deal with Nordstrom may be affected by the pendency of the merger.
• The inability of shareholders (excluding the Family Group and Liverpool) to participate in any further upside of Nordstroms business if the Merger is consummated.

Next Steps

• The Special Meeting of shareholders will be held on May 16, 2025, to vote on the proposed merger.
• Nordstrom intends to vigorously defend against the Gilbert Complaint and any future lawsuits arising from the merger.

Key Dates

Keywords

merger, Nordstrom, lawsuit, shareholder, proxy statement, Norse Holdings, litigation, acquisition