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Nordstrom (JWN) Shelves Deal Talks With Founders, Stock Dips

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Nordstrom, Inc's (JWN - Free Report) board of directors (Special Committee) has terminated all talks with the Nordstrom family regarding taking the company private, as it could not reach an acceptable price for the transaction. Further, the special committee believes that the company’s customer strategy positions it to capitalize on opportunities and gain market shares.

The company’s customer strategy is based on three strategic pillars that focus on providing a differentiated product offering; delivering exceptional services and experiences; and leveraging the strength of its brand. Further, Nordstrom is on track to integrate its digital and physical assets to provide the best customer experience. The company remains focused on advancing in the technology space by boosting e-commerce and digital networks, and improving its supply-chain channels and marketing efforts. Additionally, it remains keen on the store-expansion strategy as part of its efforts to grow market share.

The committee believes, these efforts will aid growth across the company’s full-price and off-price business models.

However, shares of Nordstrom declined nearly 2.2% yesterday in after-hours trading. However, this Zacks Rank #2 (Buy) stock has gained 3.8% in the last three months against the industry’s decline of 6.5%.


Brief History of “Going Private”

Earlier this month, the special committee turned down the Nordstrom family’s buyout proposal of $50 per share, stating it was inadequate. Notably, the bid price was lower than the company’s closing price of $51.90 on Mar 5.

The Nordstrom family comprises the company’s three co-presidents — Blake W. Nordstrom, Peter E. Nordstrom and Erik B. Nordstrom; president of stores — James F. Nordstrom; Chairman — Emeritus Bruce A. Nordstrom and Anne E. Gittinger, together. Currently, the Nordstrom family owns roughly 21% stake in the company.

The Nordstrom family first approached the company with the going-private offer in June 2017. At this time, the family was seeking viable options to buy all the outstanding shares of Nordstrom. In fact, this move was made so that Nordstrom can easily overcome the hurdles of a challenging retail landscape, characterized by consumers shifting online, soft stores’ traffic, waning margins among others. As a private firm, it will be convenient for Nordstrom to make the required investments per the changing consumer trends, without caring much about stockholders’ short-term responses. Later, the plan was temporarily put on hold before the holiday season.

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