Nordstrom rejects buyout bid from founding family, calling it too low

Nordstrom Inc. spurned a takeover offer from the department-store chain’s founding family, including several of its highest-ranking executives, saying the cash bid of $50 a share was too low.

A group of Nordstrom family members informed the board that they intended to acquire the company’s remaining shares at that price, which would value the total business at about $8.4 billion. After consulting with its financial advisor and legal counsel, a special committee of the board deemed the offer “inadequate,” the retailer said Monday.

“The special committee has directed its advisers and management not to provide further due diligence information to the group,” Nordstrom said in a statement. “Furthermore, unless the group can promptly and substantially improve the price it is proposing to pay for the company, the special committee intends to terminate discussions.”

The decision deals another setback to the Nordstrom clan’s effort to take the 117-year-old retailer private. The family embarked on a buyout plan last June, sending the stock on its biggest rally in more than eight years. The idea was to remove Nordstrom from the glare of public markets and complete its turnaround plan with less pressure.

But members of the group struggled to get a deal done. They suspended the effort in October after failing to get favorable financing terms, vowing to take up the campaign again when the holiday season was over.

Top executives

Now the family is facing a public rejection from a company where many of them work every day. The would-be buyers include the company’s co-presidents: Blake W. Nordstrom, Peter E. Nordstrom and Erik B. Nordstrom. Chairman Emeritus Bruce A. Nordstrom; James F. Nordstrom, president of stores; and Anne E. Gittinger, a granddaughter of co-founder John W. Nordstrom, also are part of the group.

The shares fell as much as 8.9% to $47.27 in after-hours trading after the announcement. They had been up 9.5% this year through Monday’s close, bolstered by the buyout speculation.

Although the idea of taking the company private is popular with investors, $50 a share would put the bid below the level where Nordstrom was trading Monday. The price probably should be at least $10 higher, said Bill Smead, chief investment officer of Smead Capital Management Inc.

“I’m not mad at them for wanting to go private, but they’ve got to pay me $60 or more,” said Smead, whose firm has $2.3 billion in assets under management — including Nordstrom shares. “The independent directors are looking out for my interests.”