Nordstrom sweetens terms to attract potential equity partners

Nordstrom is offering a deal to potential equity partners willing to fund a buyout.



The group of Nordstrom Inc. family members seeking to take the luxury department store chain private is offering preferential terms to potential equity partners willing to fund the buyout, according to Reuters. The group involved in the negotiations are company 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.



According to the report, options include offering potential partners preferred equity in the deal, so that they reap more dividends out of the company's cash flow or they get paid first if there is a stock sale in the future. The family is also contemplating using $7 billion to $8 billion in debt to finance their bid.



According to the report, sources said the decision has already reinvigorating talks with potential partners. These include private equity firms Leonard Green & Partners LP, Apollo Global Management LLC and KKR & Co LLP.



The Nordstrom family is aiming to raise around $1 billion in equity from outside investors. The group has also reached out to sovereign wealth funds, public pension funds, and firms that invest exclusively on behalf of rich families, the sources added.



The Nordstrom family plans to use funds to make investments that will make some of its stores more popular with customers, but would likely be unpopular with the company's shareholders in the short term. Making those investments as a private company would therefore be easier, one source said in the report.



These initiatives would include investing in e-commerce, closing underperforming stores and investing in top locations. Efforts also include expanding its successful discount shopping chain, Nordstrom Rack, the source added.



Nordstrom operates 354 stores, including 122 full-line stores in the United States, Canada and Puerto Rico. Nordstrom Rack encompasses 221 stores.



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