Nordstrom, Inc. JWN has been focused on driving Nordstrom banner growth, optimizing operations and building momentum at the Rack banner.

In the latest revelation, Nordstrom has inked an agreement under which Erik, Pete, Jamie Nordstrom and other members of the Nordstrom family (together, the "Nordstrom Family") and El Puerto de Liverpool, S.A.B. de C.V. (Liverpool) will acquire the entire outstanding shares of the company. These shares are not beneficially owned by the Nordstrom Family and Liverpool in an entire cash transaction worth $6.25 billion on an enterprise basis.

Per the terms of the agreement, the company’s common shareholders will obtain $24.25 in cash for a share of Nordstrom common stock held by them. The merger consideration reflects a premium of nearly 42% to JWN’s unaffected closing common stock price on March 18, 2024, since the media’s speculation of a potential transaction.

Post the completion of the aforesaid transaction, the Nordstrom Family will have a higher ownership stake in the company, making it a private company and not listed on any public market.   The company will be owned 50.1% by the Nordstrom Family and 49.9% by Liverpool, post the transaction completion.

Details on Nordstrom’s Latest Update

The aforesaid transaction is likely to conclude during the first half of 2025 and is subject to regulatory and other conditions. Such conditions include the approval of holders of two-thirds of JWN's common stock and the holders of a majority of shares not owned by the Nordstrom Family or Liverpool or their respective affiliates, and Nordstrom’s directors and Section 16 officers.

The transaction will be funded via a combination of rollover equity by the Nordstrom Family and Liverpool, cash commitments by Liverpool, nearly $450 million in borrowings under a new $1.2-billion ABL bank financing and the company’s cash.

However, Nordstrom’s $ 2.7 billion principal amount of the present senior notes and debentures are anticipated to be outstanding following the transaction. It expects to make efforts to secure JWN’s existing senior notes and debentures with a second lien on its current assets and related collateral and a first lien on its other assets (excluding real estate). This is effective upon the closing of the transaction.

The company’s board also intends to authorize a special dividend of up to 25 cents a share (based on Nordstrom's cash on hand) immediately before and contingent on the close of the transaction. Apart from this special dividend (if paid), JWN intends to continue to pay regular quarterly dividends of 19 cents a share through the close of the transaction, consisting of a pro-rated dividend for any partial quarter immediately before the closing.

The company’s board of directors, along with Erik and Pete Nordstrom recusing themselves, has unanimously approved the transaction on the recommendation of a special committee of independent directors. The special committee, including the independent and disinterested directors, was made for the potential buyout proposal.

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In the past six months, shares of this Zacks Rank #3 (Hold) company have rallied 16.5% comapred with the industry’s 17.3% gain.

Key Picks in Retail

We have highlighted three better-ranked stocks, namely Deckers DECK, Boot Barn BOOT and Abercombie ANF.

Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 13.6% from the year-ago figure. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 13.4% from the year-ago figure.

Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2. ANF delivered an earnings surprise of 16.8% in the last reported quarter.

The consensus estimate for Abercrombie’s current financial-year sales indicates growth of 13% from the year-ago figure.

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