DEFA14A: Nordstrom to Go Private in Deal with Family Members and El Puerto de Liverpool

Nordstrom has announced an agreement to be acquired by members of the Nordstrom family, along with El Puerto de Liverpool, to operate as a private company, pending shareholder and regulatory approvals.

Summary

• Nordstrom's Board of Directors has approved an agreement for the company to be acquired by members of the Nordstrom family and El Puerto de Liverpool.
• The transaction is expected to close in the first half of 2025, subject to shareholder and regulatory approvals.
• Following the transaction, the Nordstrom family will have a majority ownership stake in the company.
• Shareholders will receive $24.25 in cash for each share of Nordstrom common stock they own.
• Nordstrom may declare a special dividend prior to the closing of the transaction.
• The company's executive team is expected to continue driving operations, with the Nordstrom family and Liverpool deciding strategic direction at the Board level.
• As a private company, Nordstrom believes it will have greater flexibility in how it invests resources and balances shortand long-term priorities.
• The company's values, culture, and commitment to customer service will remain unchanged.
• The Employee Stock Purchase Plan (ESPP) will terminate upon closing of the transaction, with the current offering period being the final one.
• Unvested RSUs will be converted into the contingent right to receive cash-based awards.
• Vested stock options with an exercise price less than the sum of the per-share sale transaction price and the per-share special dividend amount (if paid) will be cancelled and converted into the right to receive a cash payment.
• The company's headquarters will remain in Seattle, and it will continue to operate under the Nordstrom and Nordstrom Rack banners.
• The SERP plan has been amended to remove a provision that would have required the Company, should a change of control take place, to fully fund accrued benefits under the SERP in a trust.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The announcement of going private is generally viewed as a positive step for the company's long-term strategy and flexibility. The cash offer to shareholders is also a positive aspect. However, there are inherent risks and uncertainties associated with the transaction, which temper the overall sentiment.

Positives

• Shareholders will receive a cash payment of $24.25 per share, potentially with an additional special dividend.
• The Nordstrom family's continued involvement suggests a commitment to the company's long-term success.
• Going private may allow for greater flexibility in resource allocation and strategic decision-making.
• The company's values, culture, and commitment to customer service are expected to remain unchanged.
• The executive team will continue to lead the company, ensuring operational continuity.
• The company anticipates providing long-term incentive opportunities substantially comparable to those provided today and designed to reward participants for driving long-term value for Nordstrom.

Negatives

• Nordstrom's common stock will no longer be listed on the New York Stock Exchange once the transaction closes.
• The Employee Stock Purchase Plan (ESPP) will terminate upon the closing of the transaction.
• Employees with stock options having an exercise price equal to or greater than the sum of the per-share sale transaction price and the per-share special dividend amount (if paid) will have their options cancelled for no consideration.
• The SERP plan has been amended to remove a provision that would have required the Company, should a change of control take place, to fully fund accrued benefits under the SERP in a trust.

Risks

• The transaction may not be completed in a timely manner or at all.
• The failure to satisfy the conditions to the consummation of the proposed transaction, including, without limitation, the receipt of shareholder approvals, the receipt of necessary regulatory approvals or the absence of a Below Investment Grade Rating Event.
• Unanticipated difficulties or expenditures relating to the proposed transaction.
• The effect of the announcement or pendency of the proposed transaction on the plans, business relationships, operating results and operations.
• Potential difficulties retaining employees, suppliers and customers as a result of the announcement and pendency of the proposed transaction.
• The response of employees, suppliers and customers to the announcement of the proposed transaction.
• Risks related to diverting managements attention from the Companys ongoing business operations.
• Legal proceedings, including those that may be instituted against the Company, its board of directors, its executive officers or others following the announcement of the proposed transaction.
• Risks regarding the failure to obtain the financing to complete the proposed transaction or have a sufficient amount of Company cash on hand to complete the proposed transaction or pay the full amount of the special dividend contemplated by the proposed transaction.

Future Outlook

Nordstrom anticipates the transaction will close in the first half of 2025, subject to certain approvals and conditions, including shareholder approval, and expects to operate with greater flexibility as a private company.

Management Comments

• The Nordstrom family cares deeply about this company, its culture, and the many employees and customers who have shaped it.
• As a private company, we believe well have greater flexibility in how we invest our resources and balance shortand long-term priorities.
• What won't change are our values, our culture, and our commitment to helping customers feel good and look their best.
• The Nordstrom family has said that Erik, Pete, and Jamie Nordstrom, along with the executive team, will continue to lead the Company following transaction close.

Industry Context

This announcement reflects a trend of retail companies seeking to go private to gain more flexibility in navigating a rapidly changing market and to focus on long-term strategies without the pressures of quarterly earnings reports.

Comparison to Industry Standards

• Other retailers, such as Neiman Marcus and Saks Fifth Avenue, have also explored or undergone ownership changes to adapt to evolving consumer preferences and competitive pressures.
• Private equity firms have been increasingly active in the retail sector, seeking to revitalize established brands and improve operational efficiency.
• The $24.25 per share offer represents a premium over Nordstrom's recent trading price, which is a common feature in acquisition deals.

Corporate Governance

Stakeholder Impact

• Shareholders will receive a cash payment for their shares.
• Employees are assured that their compensation and benefits will remain consistent until the transaction closes.
• Customers are told that the company's commitment to service and values will not change.
• Retirees are informed of the transaction and thanked for their past contributions.
• Equity award holders are provided with details on how their awards will be treated in the transaction.

Next Steps

• Shareholder approval of the proposed transaction.
• Receipt of necessary regulatory approvals.
• Filing of a transaction statement on Schedule 13E-3.
• Filing of a proxy statement on Schedule 14A relating to a special meeting of shareholders.
• Continued operation as a public company until the transaction closes.
• Determination and potential declaration of a special dividend.

Key Dates

Keywords

Nordstrom, acquisition, private company, El Puerto de Liverpool, shareholders, transaction, ESPP, RSUs, stock options, SERP