Nordstrom, Inc 's JWN board of directors (Special Committee) has turned down the buyout proposal from the Nordstrom family alias the Group, stating that the cash bid of $50 per share is inadequate. The Special Committee, consisting of the independent directors, has scrutinized the proposal in consultation with its financial advisor and legal counsel and arrived at the decision, in the best interest of the company and its stockholders. Notably, the bid price is even lower than the closing price of $51.90 on Mar 5.
Also, the Special Committee has prohibited its advisors from providing any more due diligence information to the Group. The Committed has suspended talks on the matter until an improved bid is put forth by the Group.
Following the news, shares of Nordstrom declined nearly 2.2% yesterday in after-hours trading. However, this Zacks Rank #2 (Buy) stock has rallied 15.4% in the last three months, outperforming the industry 's gain of 2.6%.
The Nordstrom family comprises the company's three 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, together. Currently, the Nordstrom family owns roughly 21% stake in the company.
Brief History of the Proposed Offer
This deal of taking Nordstrom private dates back to June 2017, when the Group was seeking viable options to buy all the outstanding shares of Nordstrom. In fact, this move was made so that Nordstrom can easily overcome the hurdles of a challenging retail landscape characterized by consumers shifting online, soft stores' traffic, waning margins, among others. As a private firm, it will be convenient for Nordstrom to make the required investments per the changing consumer trends, without caring much about stockholders' short-term responses.
Since then, the Group has been looking for potential sponsors. In fact, there were rounds that the Nordstrom family was nearing a deal with Leonard Green & Partners, apart from being in talks with Apollo Global Management LLC and KKR & Co. L.P., to help the deal pass through.
Furthermore, the plan was temporarily put on hold before the holiday season. Now, it remains to be seen whether the Group increases the bid price and the deal is made, thus creating shareholders' value.
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