Popular fashion retailer Nordstrom has struck a deal to go private, valuing the company at $6.25 billion including debt, as business-to-consumer M&A activity shows signs of recovery amid sector headwinds.
The Nordstrom family and El Puerto de Liverpool, a Mexican retailer and existing shareholder, will acquire the outstanding shares of the company, with majority ownership residing with the Nordstrom family at 50.1%, while Liverpool will own the remaining 49.9%.
Nordstrom’s share price has fluctuated since the onset of the pandemic, falling below $12 in 2020 and reaching a peak of more than $42 in 2021. Stakeholders will receive $24.25 per share in cash.
The buyers offered $23 per share in September, and according to David Swartz, senior equity analyst with Morningstar, the offer is expected to be approved due to the “high (roughly 43%) ownership of the buyout group, and apparently solid financing,” he wrote in an analyst note.
The timing of the deal aligns with a strong quarter for the sector, as PitchBook’s Q3 2024 Global M&A Report indicates B2C M&A deal value for the year reached $434.4 billion and is expected to surpass the $462.2 billion recorded in 2023, despite challenges like evolving consumer behavior and diminished purchasing power.
The all-cash transaction will be financed through rollover equity from the Nordstrom family and Liverpool, cash commitments from Liverpool, $1.2 billion in financing from an ABL bank with up to $450 million borrowings, and company cash.
Shareholders will receive a 42% premium over its March 18 closing stock price—a slight increase from the September offer of $23 per share. The deal also follows Nordstrom’s failed 2018 attempt to go private at a reported $50 per share.
Financial advisers on the deal included Morgan Stanley and Centerview Partners for Nordstrom, JP Morgan for Liverpool, and Moelis for the Nordstrom family.
Featured image by RiverNorthPhotography/Getty Images
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