The Nordstrom family is going to have to go higher than $50 a share if they want to take full control of the department store that bears their name.
A special committee of Nordstrom Inc.’s board on Monday rejected a long-awaited proposal for a buyout from the family.
That rejection and a threat to “terminate discussions” were largely seen as part negotiating tactic and part corporate theater since the committee needs to establish and maintain its independence in the process.
One investment banking source described the rejection as: “Typical for related-party deals, hard to accept first offer. Typical negotiating.”
The question is what happens next and how high does the offer have to go before the special committee gives the thumbs up. Also unclear, is just how large of a role Leonard Green & Partners is playing in the process, having joined in with the Nordstroms’ buyout effort last year.
The family — including copresidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom, president of stores James Nordstrom, chairman emeritus Bruce Nordstrom and Anne Gittinger — indicated that they proposed a deal at $50 a share. The deal would buy out other shareholders and also about 21 percent of the Nordstrom stock held by the family.
All together, the family holds about 51.8 million shares or Nordstrom, or 31.2 percent of the company.
“The special committee has reviewed the group’s indicative acquisition proposal, in consultation with its financial advisor and legal counsel, and has determined that the price proposed is inadequate,” the company said. “The special committee has directed its advisers and management not to provide further due diligence information to the group. Furthermore, unless the group can promptly and substantially improve the price it is proposing to pay for the company, the special committee intends to terminate discussions.”
The special committee, formed so the board could independently evaluate any offer, has been working with Centerview Partners as financial adviser and Sidley Austin as legal counsel.
Shares of the company slipped 2.1 percent to $50.80 in after-hours trading, following word from the committee. In normal trading, the stock closed down 2.2 percent to $51.90, giving the company a market capitalization of $8.6 billion.
The Nordstrom family started a process in June to evaluate such a transaction last year only to hit pause on the process in the fall, as retail in general suffered and the holiday season injected more uncertainty.
Since then, the company’s stock has been propped up by the potential of a deal, but given the time that has elapsed, it’s difficult to discern how much of the stock price comes from the hopes of a deal and how much from underlying operations and the prevailing market sentiment.
After the holiday hiatus, when sources said major banks had submitted proposals to finance the deal, which could potentially pile significantly more debt onto the retailer, but also give it more flexibility.
The Nordstroms are known for being open to new approaches and combinations.
The retailer — which has linked with retailers such as J. Crew, Madewell, Topshop/Topman, Charlotte Tilbury and Brandy Melville — is partnering with Anthropologie to introduce more than 200 items from Anthropologie Home at select Nordstrom stores and on nordstrom.com, beginning March 19.
Separately, the Anthropologie Home collection will encompass the kitchen, dining and entertaining, bed and bath textiles, room decor, stationery and hardware categories.
According to Gemma Lionello, a Nordstrom executive vice president and general merchandise manager, Nordstrom has been “evolving” its home business but will offer “the best of Anthropologie Home on a regular cadence.”
Nordstrom said that its Anthropologie Home collection would have a mix of “classic and iconic pieces, new seasonal designs and exclusive artist collaborations. Work from 20 artists, discovered around the world, is reflected in the wide range of techniques, mediums and styles in the collection. They include Massachusetts-based ceramicist Molly Hatch’s whimsical creations, painter and U.K. native Sally Muir’s dog portraiture, Los Angeles studio All Roads Design’s artisanal textiles and North Carolina’s Suite One Studio’s watercolor inspired designs.
The retailer will be creating shops-in-shops for Anthropologie Home in its “At Home” areas of the select Nordstrom stores, and there will be dedicated landing page for. Anthropologie Home on nordstrom.com.
The Seattle-based firm already sells a good deal of home products, including home decor, mirrors, candles, picture frames, desk accessories, stationery, lighting, dinnerware, cookware, small appliances and speakers, among other products.