Sources say Sycamore seeks to acquire Nordstrom and make it private

03 May 2024 1658
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Reports indicate that Sycamore Partners, a well-known buyout firm, is eyeing a deal to privatize Nordstrom, a prominent U.S. department store, according to insiders. Last month, Nordstrom stated that its CEO Erik Nordstrom and his brother Pete, who is the president of the company, were exploring possible paths towards privatization. This followed a Reuters report postulated in March.

While discussions are expected to continue for some weeks, it remains uncertain whether Sycamore, which currently owns the U.S. regional department store Belk, or any other private equity suitor will be successful in securing a deal. The sources coveted for their anonymity as the talks are yet to be made public. Sycamore chose not to comment, and Nordstrom representatives have yet to respond to comment requests.

Upon the news, Nordstrom's shares experienced a 6% boost to $19.90 during Thursday's afternoon trading slot on the New York Stock Exchange. Consequently, this pushed the company's market value to approximately $3.3 billion. As of December's end, Nordstrom also owed a long-term debt totalling $2.9 billion.

Nordstrom, among other U.S. retailers, is currently navigating difficulties born from inflation and high-interest rates that resulted in curbed discretionary spending by consumers. Macy's Inc, another department store operator, has faced quite similar circumstances in becoming a takeover target. Nordstrom boasts over 350 stores alongside e-commerce operations. Nordstrom's CEO Erik and other family members hold a 30% stake collectively in the Seattle-based company.

In 2017, Nordstrom established a special board committee to review a privatization bid by the family and sought out several private equity firms, among them Leonard Green. However, in 2018, the special committee rejected an $8.4-billion offer, deeming it insufficient. This led Erik and Pete Nordstrom to increase their company stake from under 5% to 9.5% and agreed to delegate deal approval to a majority of unaffiliated shareholders.

New York's Sycamore procured Belk, which comprises almost 300 stores across 16 southeastern U.S. states, in 2015 from its founding family for a sum of $3 billion. Following the Covid-19 pandemic-induced downturn in 2021, Sycamore restructured Belk's debt while maintaining majority control. Additionally, Sycamore previously contemplated over buying other department store operators, such as Kohl's Corp.