And so, that was how it ended for chain retailer Nordstrom (JWN), who announced plans to go private following a $6.25 billion deal with El Puerto de Liverpool, a Mexican retailer. Shares slipped just over 1.5% as a new floor was established on share prices as a result, and a major retail brand will no longer be traded.
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The deal with El Puerto, noted a CNBC report, was set up by Nordstrom’s founding family, but the board of directors was definitely interested in pursuing it. The board voted unanimously to go with the deal, which is now expected to close sometime in the first half of 2025.
Current shareholders of Nordstrom, meanwhile, will be paid $24.25 in cash per share, but the Nordstrom family itself will come out slightly ahead as they will own 50.1% of the company. El Puerto, meanwhile, gets just 49.9% for the billions it will lay out. While Nordstrom managed to beat expectations for the third quarter when it released earnings in November, many wondered if the holiday season would go Nordstrom’s way at all. Even Nordstrom expected a “soft” holiday season overall.
Then The Lawsuits Kicked In
It will likely surprise no one that not all shareholders were exactly pleased with this development, and responded accordingly. Ademi LLP has launched an investigation for “possible breaches of fiduciary duty,” noted a Business Wire release, over one key part of the agreement.
The report noted that the transaction agreement “…unreasonably limits competing transactions for Nordstrom by imposing a significant penalty if Nordstrom accepts a competing bid.” So, basically, if someone else were to offer shareholders, say, $30 per share, Nordstrom could not take the offer without paying a hefty penalty to El Puerto. And that in turn fired up the litigation buses. Since the board of directors went in unanimously, as noted previously, Ademi’s investigation is targeting the board in particular, the report noted.
Is Nordstrom a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on JWN stock based on eight Holds and three Sells assigned in the past three months, as indicated by the graphic below. After a 33.68% rally in its share price over the past year, the average JWN price target of $22.28 per share implies 7.63% downside risk.
