Nordstrom's Potential Privatization Entices Equity Firm Sycamore: Report

Sycamore Partners, a prominent buyout equity firm, has reportedly emerged as one of the contenders expressing interest in privatizing the renowned U.S. department store Nordstrom Inc (NYSE:JWN). 

Recently, Nordstrom’s CEO Erik Nordstrom and his brother Pete, who serves as the company’s president, confirmed their exploration of privatization options.

Negotiations are expected to span several weeks, with no guarantee of a deal with Sycamore or any other potential private equity buyer, according to a report from Reuters.

Following the news, Nordstrom’s shares surged by 6% on the New York Stock Exchange on Thursday, reflecting a market value of approximately $3.3 billion. 

Notably, Nordstrom carries a net long-term debt amounting to $2.6 billion as of February 3.

Nordstrom and other U.S. retailers are confronting challenges stemming from restricted consumer spending amid inflation and elevated interest rates. 

Macy’s Inc (NYSE:M) has also attracted attention as a potential acquisition target within the department store sector.

With over 350 stores and e-commerce presence, Nordstrom, headquartered in Seattle, counts Chief Executive Erik Nordstrom and other family members as owners of roughly 30% of the company.

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In 2017, Nordstrom established a special board committee to evaluate a potential privatization bid by the family and engaged in discussions with various private equity firms, including Leonard Green. 

However, a $8.4-billion offer presented in 2018 was deemed insufficient by the special committee.

Since then, the Nordstrom brothers have bolstered their ownership stake in the company from below 5% to 9.5%, the report mentioned. 

Sycamore, headquartered in New York, made headlines in 2015 with its acquisition of Belk, a regional U.S. department store chain, for $3 billion. 

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Price Action: JWN shares closed higher by 6.22% at $19.98 on Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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