US department store chain Nordstrom could be going private as buyout company Sycamore Partners has expressed interest in a potential acquisition, according to industry sources, Reuters reported.
This news follows Nordstrom’s announcement in March that it was exploring privatisation options.
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According to Reuters, negotiations are ongoing, and a deal isn’t guaranteed.
Sources familiar with the matter reportedly said it could take several weeks to reach an agreement.
Sycamore, which currently owns regional department store operator Belk, faces competition from other private equity businesses.
Nordstrom’s stock price jumped 6% on the news, reflecting investor interest in the potential deal.
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By GlobalDataThe company, with a market value of $3.3bn, also carries $2.9bn in long-term debt.
This move comes amidst a challenging retail landscape.
Rising inflation and interest rates have dampened consumer spending, impacting department stores such as Nordstrom and Macy’s. As a result, the sector has become a target for potential acquisitions.
Nordstrom boasts a significant presence with more than 350 physical stores and a well-established e-commerce platform.
The Nordstrom family holds a substantial stake of approximately 30% in the Seattle-based company, led by CEO Erik Nordstrom.
This is not the first attempt to take Nordstrom private. In 2017, the company formed a committee to evaluate a family-led privatisation bid.
While discussions with private equity companies such as Leonard Green took place, an $8.4bn offer in 2018 was ultimately rejected as insufficient.
Following this, the Nordstrom brothers increased their ownership stake to 9.5% from below 5%.
Notably, any potential deal would require approval by a majority of unaffiliated shareholders.
Sycamore Partners, headquartered in New York, acquired Belk in 2015 for $3bn.
The Belk chain operates nearly 300 stores across 16 south-eastern US states.
While Sycamore restructured Belk’s debt in 2021 after the pandemic downturn, it maintained control of the company.
Sycamore has a history of interest in department store acquisitions, having previously considered purchasing Kohl’s.
This latest move highlights the ongoing consolidation within the retail sector, with private equity companies seeking opportunities in a changing consumer landscape.
