A special committee of the Nordstrom Board of Directors rejected an acquisition proposal from members of the Nordstrom family, determining that the bid, worth approximately $8.4 billion, was inadequate.
The founding family members who crafted the bid include company Co-Presidents Blake W. Nordstrom, Peter E. Nordstrom, and Erik B. Nordstrom; President of Stores James F. Nordstrom; Chairman Emeritus Bruce A. Nordstrom; and Anne E. Gittinger,the granddaughter of company Co-Founder John W. Nordstrom.
The battle for Nordstrom’s future is an internal affair. The founding family, which owns 31% of the company, created the offer to take the department store private months after suspending the campaign in October 2017. But they are up against their own Board, which includes Chairman Philip Satre, the former Chairman and CEO of Harrah’s Entertainment, and independent directors such as JPMorgan Chase & Co. executive Gordon Smith and TaskRabbit Inc. CEO Stacy Brown-Philpot.
The Board members, who formed a special committee to evaluate the possible transaction, will terminate discussions if the family doesn’t quickly and substantially increase their offer.
The family is willing to contribute approximately $2 billion worth of their own shares to the deal, and they’ve been working with private equity firm Leonard Green & Partners LP to line up funds. The investment firm, together with affiliated funds and partners, would commit up to $1.5 billion to $2 billion, the group said on Monday.
The Nordstrom family group's offer comes just days after the department store reported its Q4 results, which included a net sales rise of 8.4% to $4.6 billion and a same-store sales rise of 2.6%, both handily beating analysts' estimates. But net profit missed analyst estimates, sending the stock down 4.7% the day after the earnings release.
This volatility has been a major reason why the family is so intent on taking Nordstrom private.
“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,” the family said in an SEC filing.