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 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 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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