DEFM14A: Nordstrom Shareholders to Vote on $24.25 Per Share Merger with Family Group, Liverpool

Nordstrom shareholders will convene on May 16, 2025, to vote on a proposed merger agreement that would see the company acquired for $24.25 per share by a group including the Nordstrom family and El Puerto de Liverpool.

Summary

• Nordstrom, Inc. is holding a special meeting of shareholders on May 16, 2025, to vote on a proposal to approve a merger agreement.
• Under the agreement, Nordstrom will be acquired by Norse Holdings, Inc. (Parent) and its subsidiary, Navy Acquisition Co. Inc.
• Parent and Acquisition Sub are affiliated with certain members of the Nordstrom family and El Puerto de Liverpool S.A.B. de C.V. (Liverpool).
• If the merger is approved, Acquisition Sub will merge with and into Nordstrom, with Nordstrom surviving as a wholly owned subsidiary of Parent.
• Each share of Nordstrom common stock will be converted into the right to receive $24.25 in cash, without interest and less any required tax withholdings.
• This represents a premium of approximately 42% to the Nordstrom common stock's unaffected closing price on March 18, 2024.
• Nordstrom's Board of Directors intends to declare a special dividend of up to $0.25 per share prior to and contingent on the closing of the Merger.
• The Special Committee and the Nordstrom Board have unanimously recommended that shareholders vote in favor of the merger agreement.
• Approval of the merger agreement requires the affirmative vote of (1) the holders of shares of Nordstrom Common Stock representing two-thirds of the outstanding shares of Nordstrom Common Stock entitled to vote thereon at the Special Meeting and (2) the holders of shares of Nordstrom Common Stock representing a majority of the outstanding shares of Nordstrom Common Stock entitled to vote thereon at the Special Meeting other than shares owned, directly or indirectly, by the Parent Parties or by any director or officer of Nordstrom.
• The Family Group and Liverpool have entered into Rollover, Voting and Support Agreements with Nordstrom and Parent, agreeing to vote their shares in favor of the merger agreement.
• If the merger is consummated, Nordstrom common stock will be delisted from the New York Stock Exchange and Nordstrom will become a privately held company.

Sentiment

Score: 7

Explanation: The document is a formal proxy statement, so the sentiment is neutral. However, the deal itself offers a premium to shareholders, suggesting a positive outcome for them.

Positives

• Shareholders will receive $24.25 per share in cash, representing a 42% premium to the unaffected closing price on March 18, 2024.
• A special dividend of up to $0.25 per share may be declared prior to the merger's closing.
• The Special Committee and the Nordstrom Board unanimously recommend voting FOR the merger.
• The Family Group and Liverpool, owning approximately 42.3% of Nordstrom's shares, have agreed to vote in favor of the merger.

Negatives

• Shareholders will no longer have an equity stake in Nordstrom after the merger.
• Nordstrom Common Stock will be delisted from the NYSE.
• The exchange of shares for cash will be a taxable transaction for U.S. federal income tax purposes.

Risks

• The merger may not be completed if the Requisite Shareholder Approvals are not obtained or if other closing conditions are not satisfied.
• The price of Nordstrom Common Stock may decline significantly if the merger is not consummated.
• The merger could be delayed or prevented by regulatory agencies or litigation.
• There is a risk of a Below Investment Grade Rating Event occurring.
• There is a risk that Nordstrom may not have sufficient Nordstrom Cash on Hand in order to seek specific performance of Parents obligation to effect the Merger and Liverpools obligation to fund its equity commitment or to pay some or all of the up to $0.25 per share Special Dividend.

Future Outlook

Nordstrom expects to complete the Merger in the first half of 2025, subject to the satisfaction of closing conditions.

Management Comments

• The Special Committee unanimously determined that the Merger Agreement and the consummation by Nordstrom of the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Nordstrom and its shareholders.
• The Nordstrom Board, acting on the unanimous recommendation of the Special Committee, unanimously (with Messrs. Erik and Peter Nordstrom recusing themselves) determined and declared that the Merger Agreement and the consummation by Nordstrom of the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Nordstrom and its shareholders.

Industry Context

The document notes that the retail environment has rapidly evolved, with full line department stores losing market share to specialty, off-price, and e-commerce retailers.

Comparison to Industry Standards

• The document compares Nordstrom's financial performance and trading activity to publicly-traded companies like Kohl's Corporation and Macy's, Inc.
• The document also references selected transactions involving publicly traded U.S.-based retail operator target companies occurring since 2015, each with a transaction value greater than $1 billion, for which premium data were available.

Legal Proceedings

• One lawsuit relating to the Merger has been filed, Gilbert v. Nordstrom, Inc. et al., No. 2:25-cv-00568 (W.D. Wash. Mar. 31, 2025), alleging violations of the Washington Moratorium Statute and breaches of fiduciary duty.

Related Party Transactions

• The Merger involves the Nordstrom family and El Puerto de Liverpool S.A.B. de C.V., both of which are considered related parties.
• The Family Group and Liverpool have entered into Rollover, Voting and Support Agreements with Nordstrom and Parent.
• Messrs. Erik and Peter Nordstrom are expected to receive employment agreements in connection with the consummation of the Merger pursuant to which they will serve as Co-Chief Executive Officers and Co-Chairmen of the Board of the Parent.

Stakeholder Impact

• Shareholders will receive $24.25 per share in cash, plus a potential special dividend.
• Employees may experience changes in compensation and benefits, with Parent committing to provide comparable terms for at least one year.
• Customers may see changes in Nordstrom's operations and strategies as a private company.

Next Steps

• Shareholders will vote on the Merger Proposal, the Compensation Proposal, and the Adjournment Proposal at the Special Meeting on May 16, 2025.
• If the Merger Proposal is approved, the parties will work to satisfy the remaining closing conditions and complete the Merger.

Key Dates

Keywords

Merger, Nordstrom, Shareholders, Acquisition, Liverpool, Family Group, Proxy Statement, Stock, Dividend, Vote