Nordstrom Suspends Plan to Take Company Private

Gladys Abbott
October 17, 2017

In a SEC filing Monday morning, the company announced that key members of the executive team - including Co-Presidents Blake W. Nordstrom, Peter E. Nordstrom and Erik B. Nordstrom- have told the special committee of the company's board of directors that they have suspended, for at least the rest of the year, any exploration to take the 116-year-old retailer private.

The Nordstrom family originally planned to put up its 31 percent stake in the company, which as of August 1 was valued at $2.5 billion, and private-equity firm Leonard Green & Partners was to contribute another $1 billion in equity.

In the market the company is trading up since yesterday's close of 42.59. In scrubbing the deal for now, the chain cited "the difficulty of obtaining debt financing in the current retail environment".

Nordstrom is relatively strong compared with many of its retail rivals, with a reputation for consistent customer service and steady online sales growth.

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Nordstrom will not be closing in on a major private sale this year. The Company's segments include Retail and Credit. The deal, if struck, would have given Leonard Green Partners 100 percent of the outstanding shares. The Company operated 290 United States stores located in 38 states, as well as an e-commerce business through Nordstrom.com, Nordstromrack.com and HauteLook and TrunkClub.com, as of March 16, 2015. Gordon Haskett analyst Chuck Grom estimated that the family needed to raise between $5.65 billion and $8.19 billion to acquire the remainder of the retailer. The long-standing toy retailer was driven to that end by the ongoing retail apocalypse, which which has seen emerging juggernauts like Amazon (NASDAQ:AMZN) threaten the long-term future of traditional brick-and-mortar retailers. While credit generally has been free-flowing for companies amid a global hunt for yield, it's been a different story for an industry that has increasingly come under distress. For junk issuers more broadly, the measure dropped about half a percentage point to 6 percent, the index data show. Macy's, J.C. Penney and Sears are closing hundreds of locations and trying to beef up their online sites.

And potential buyers are more skeptical given that mall-based retailers are in "a space that right now is very broadly out of favor", said Dylan Carden, an analyst at William Blair.

But sources told The Post that getting financing from banks has been hard, especially after the surprise bankruptcy of Toys "R" Us. Four research analysts have rated the stock with a sell rating, seventeen have given a hold rating and eight have assigned a buy rating to the company. Nordstrom had a return on equity of 71.57% and a net margin of 2.44%.

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