DEFA14A: Nordstrom to Be Acquired by Nordstrom Family and Liverpool for $24.25 Per Share

Nordstrom, Inc. has entered into a definitive agreement to be acquired by the Nordstrom Family and Liverpool for $24.25 per share in cash, representing a premium of approximately 42% since March 18, 2024.

Summary

• Nordstrom, Inc. has agreed to be acquired by the Nordstrom Family and Liverpool in an all-cash transaction.
• The acquisition price is $24.25 per share, valuing the company at approximately $6.25 billion on an enterprise basis.
• This represents a 42% premium over the unaffected closing stock price on March 18, 2024.
• The Nordstrom Board intends to authorize a special dividend of up to $0.25 per share, contingent on the closing of the transaction.
• Following the transaction, the Nordstrom Family will have a majority ownership stake (50.1%) and Liverpool will own 49.9%.
• The deal is expected to close in the first half of 2025, pending regulatory and shareholder approvals.
• Financing will come from rollover equity, cash commitments from Liverpool, up to $450 million in borrowings under a new $1.2 billion ABL bank financing, and Company cash on hand.
• The company's existing senior notes and debentures are expected to remain outstanding following the transaction and will be secured.
• Upon completion, Nordstrom's common stock will be de-listed from the NYSE.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook due to the significant premium offered to shareholders and the commitment of the Nordstrom Family and Liverpool to the company's future.

Positives

• Shareholders will receive a significant premium for their shares.
• The Nordstrom Family and Liverpool are committed to the long-term success of the company.
• The transaction provides certainty of value for shareholders.
• The company's existing senior notes and debentures are expected to remain outstanding following the transaction and will be secured.

Negatives

• The company will be de-listed from the NYSE, reducing liquidity for shareholders who wish to sell their shares after the transaction closes.
• The special dividend is contingent on the company's cash on hand at the time of closing and may not be paid in full.

Risks

• The transaction may not close in a timely manner or at all.
• Shareholder or regulatory approvals may not be obtained.
• Financing may not be available on acceptable terms.
• A Below Investment Grade Rating Event may occur.
• The company may face difficulties retaining employees, suppliers, and customers.
• Legal proceedings may be instituted against the company.

Future Outlook

Following the close of the transaction, Nordstrom will become a private company owned primarily by the Nordstrom Family and Liverpool.

Management Comments

• Erik Nordstrom stated that today marks an exciting new chapter for the business and that the family looks forward to working with their teams to ensure Nordstrom thrives long into the future.
• Pete Nordstrom expressed gratitude to employees, customers, and shareholders and stated that they look forward to building on their commitment to providing the best possible service in this next phase of the company's evolution.
• Graciano F. Guichard G. of Liverpool stated that they are thrilled to be investing in a company that has meaningfully shaped the industry for nearly 125 years and are honored to partner with the Nordstrom Family and the company's talented team.

Industry Context

The acquisition reflects a trend of department stores seeking strategic alternatives, including going private, to navigate a challenging retail landscape and adapt to changing consumer preferences.

Comparison to Industry Standards

• The 42% premium is comparable to premiums seen in other recent retail acquisitions.
• The involvement of a major international retailer like Liverpool is similar to other instances of foreign investment in US retail brands.
• The use of rollover equity and debt financing is a common structure for private equity-backed acquisitions.

Corporate Governance

Related Party Transactions

• The acquisition involves the Nordstrom Family, who are related parties.
• Liverpool, a significant shareholder, is also part of the acquiring group.

Stakeholder Impact

• Shareholders will receive a cash payment for their shares.
• Employees may experience changes in the company's structure and operations.
• Customers may see changes in the company's strategies and offerings.
• Suppliers and vendors may be affected by the change in ownership.

Next Steps

• Obtain shareholder approval.
• Obtain regulatory approvals.
• Secure financing.
• Close the transaction.

Key Dates

Keywords

acquisition, merger, nordstrom, liverpool, shareholders, premium, transaction, family