Retail

Nordstrom ends talks with Nordstrom family to take company private

Key Points
  • The special committee advising Nordstrom's board has ended talks with the Nordstrom family about taking the company private.
  • The two parties were not able to agree on price.
  • The announcement ends efforts that had first started last year.
Pedestrians walk past a Nordstrom Inc. store.
Ben Nelms | Bloomberg | Getty Images

The special committee advising Nordstrom's board said Tuesday it has ended talks with the Nordstrom family about taking the company private, after the two parties were not able to agree on price.

A group of Nordstrom family members, which owns 31.2 percent of Nordstrom, had been working to take the retailer private on and off since last year. The company had appointed a special committee to the company's board to evaluate those efforts.

The board earlier this month announced it had rebuffed an initial offer of $50 a share as too low. The Nordstrom family had been seeking to put together an offer for a higher bid as recently as yesterday, sources familiar with the situation told CNBC.

The family had been working with private equity firm Leonard Green & Partners in its bid. Its efforts to raise its offer relied at this point on the structure of equity Leonard Green contributed, as well as the family's ability to secure financing from a third party, in addition to traditional debt, sources have told CNBC.

Lenders and investors, though, have been reticent to dole out big checks to finance retail acquisitions. A string of leveraged buyouts have left a legacy of bankruptcies and low-trading bonds. They have highlighted the danger of debt at a time retailers must make large strategic investments to readjust to the changing retail landscape.

Toys R Us demonstrated the risks last week when it announced it is shutting down its U.S. business — a little over a decade after being taken private in a leveraged buyout.

Still, for Nordstrom and others, the private market afforded an opportunity to escape the punishing public market spotlight. Stock market investors have had little patience for the impact on the bottom line that e-commerce investments can have. They are often rattled by store closure announcements.

The Nordstrom family had hoped that, after going private, the company could further its digital investments and further focus on realigning its store footprint, source have told CNBC.

The special committee in its statement on Tuesday said it is "confident that [Nordstrom's] ability to leverage its digital capabilities and its local market assets of people, product, and place will support growth."