Nordstrom rejects family's $50-a-share take-private offer, threatens to terminate discussions

Benjamin Romano, The Seattle Times on

Published in Business News

SEATTLE -- Nordstrom family members offered $50 a share to buy out their namesake retailer and take it private, but a board of directors committee curtly rejected the price Monday as "inadequate."

The offer, valuing the company co-founded in 1901 by John W. Nordstrom at $8.35 billion, was $3 below the per-share price of Nordstrom's stock at the close of trading on Friday, a day after the company reported strong quarterly sales but disappointing profits.

The family group noted in a regulatory filing that the $50 price tag represents a 24 percent premium to the company's $40.48 share price on June 7, 2017, the day Nordstrom family members took their first public steps toward buying out the company.

Financial analysts noted that company values across the retail sector have increased since last summer, due to the continuing strength of the economy and improved consumer outlook in light of the tax cuts.

The family, in a letter to the special Nordstrom board committee convened to represent shareholders and entertain offers, described the contemplated transaction as "an attractive outcome" for the company and various stakeholder groups, adding, "A transaction would ensure that the Company has the flexibility to successfully navigate a challenging retail landscape at a critical time when the public market for retail stocks is highly volatile and increasingly focused on short-term results and risks."

While the family suggests the deal would allow shareholders to "avoid these risks inherent in the current changing retail environment," the offer – coming in lower than the recent share price -- appears to have rankled the special board committee.

In a statement Monday afternoon, the committee said it had directed its financial advisers and company management "not to provide further due diligence information to the (Nordstrom family) Group."

The statement continued, "Furthermore, unless the Group can promptly and substantially improve the price it is proposing to pay for the Company, the Special Committee intends to terminate discussions."

Nordstrom shares fell $1.14, or 2.2 percent Monday, to $51.90, and fell a further $1.30, or 2.5 percent, in after-hours trading.

The family ownership group includes Nordstrom's most senior executives -- the same people tasked with guiding the company's transition from a retailer known for high-touch service in tony department stores to one that serves customers online equally well. Executives said last week that billions of dollars invested in that and other efforts over the last half-decade will begin to pay off in expanding profit margins this year.


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