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Nordstrom Family Closing in on Deal to go Private


Nordstrom may go private after all.

Reuters reported Friday that the family group that controls 30 percent of the department store chain is finalizing an offer to take it private.

Sources close to the matter said the group has been meeting with investment banks, which are waiting for approvals before providing the financing. A deal could come as early as next month, they said.

Ask anyone and they’ll tell you it’s challenging to overhaul a company—and beyond difficult when that business is public. And given the massive changes that many retail chains need to undertake to stay viable today, any efforts toward that end would likely send share prices into a spiral.

It’s not impossible though. Coach turned its flailing business around with a sweeping strategy that transformed every aspect of the company with investors along for the sometimes-bumpy ride. But even that company, now known as Tapestry, would probably have had an easier time if it could have done so away from public eyes.

For that reason, Nordstrom began efforts last year to go private. Though broadly seen as having one of the best department store businesses going, Nordstrom hasn’t been immune to the changes that have rattled the industry. The family group that holds about 30 percent of the company stock, announced in June that it was exploring the possibility of acquiring 100 percent of the outstanding shares of common stock.

As the weeks progressed, a deal looked possible—and then less so. In September, the Nordstroms reportedly struck a deal with Leonard Green & Partners for approximately $1 billion to fund the outcome. But the possibility of landing debt financing dimmed and Nordstrom dropped the idea in October, as the holidays closed in.

Though it now looks like a deal could be possible, not everyone agrees it’s the right move for the retailer.

“I don’t think Nordstrom should put a lot of debt on,” said Jan Rogers Kniffen, former May Department Store executive. “If I were advising Nordstrom, I would suggest they do what Walmart did, buy back stock so the family has half of the business so they don’t have to worry [about] having to leveraging it up.”

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Kniffen is bullish about the Nordstrom brand and operations. He credits the retailer with grasping the importance of omnichannel before any of its peers, hopping on the off-price bandwagon long before many of the rest and refusing to open too many stores at a time when saturating the market was in vogue.

Further, Kniffen sees the field clearing in the upper department store tier, which he said will provide an opportunity for Nordstrom. “I don’t think we need Neimans, Lord & Taylor or Saks. I think Nordstrom can fill that space,” he said. “Nordstrom is the long-term survivor in that space.”