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Sycamore Partners, among other buyout equity firms, is reportedly showing keen interest in the privatization of the renowned U.S. department store Nordstrom, as confirmed by insiders.
Last month, Nordstrom’s CEO Erik Nordstrom and President Pete Nordstrom disclosed their exploration of privatization options, confirming a previous Reuters report from March. Negotiations are anticipated to span several weeks, with no definitive assurance of a deal with Sycamore or any other potential private equity bidder, as sources familiar with the matter disclosed on condition of anonymity due to confidentiality concerns.
While Sycamore abstains from commenting, Nordstrom’s representatives are yet to respond to requests for comments. Nordstrom’s shares surged by 6% to USD 19.90 on the New York Stock Exchange following this revelation, reflecting a market valuation of approximately USD 3.3 billion, coupled with long-term debts of USD 2.9 billion as of December’s conclusion.
Nordstrom, alongside other U.S. retailers, grapples with consumer spending limitations amid inflationary pressures and elevated interest rates. Macy’s Inc., another department store entity, finds itself in the crosshairs of potential takeovers. With over 350 brick-and-mortar stores and a robust e-commerce presence, Nordstrom is helmed by CEO Erik Nordstrom and boasts a family stake of around 30% in the Seattle-based establishment.
This pursuit of privatization isn’t new, as a special board committee was formed in 2017 to assess a familial bid for privatization, which included engagement with private equity firms like Leonard Green. However, in 2018, the special committee rejected an USD 8.4 billion offer as inadequate.
Over time, Erik and Pete Nordstrom have incrementally upped their stake in the company, now owning 9.5%, with any proposed deal mandated to secure majority approval from non-affiliated shareholders. Sycamore Partners, headquartered in New York, gained prominence after its acquisition of Belk in 2015, a regional U.S. department store operator, for USD 3 billion.
Despite facing sectoral downturns amidst the COVID-19 pandemic, Sycamore restructured Belk’s debt in 2021 while retaining majority control. The firm has also explored potential acquisitions of other department store operators, such as Kohl’s Corp.
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