Luxury Goods Department Nordstrom Will Be Privatized And Delisted.

U.S.A

Department store Nordstrom recently said that some members of the Nordstrom family are considering privatizing the company as a result of slowing growth in the retail industry.

Privatization will enhance corporate debt, which is a bet for Nordstrom's founding family and largest shareholder. The company may be able to remodel itself through privatization and stand out from the near collapse of the retail industry.

Current American

There are serious problems of declining traffic volume, including

Retailers, including Messi stores, are trying to boost sales.

The stock price of Nordstrom has fallen by 16% this year, but it has not yet had a large scale of closure than Messi's department store. Not only that, they also built a 367 thousand square foot flagship store in Manhattan, New York, at a cost of 500 million dollars.

Nordstrom released its first quarter financial data in May, while its same store sales were lower than expected, but profit growth was in line with expectations, but share prices still fell.

At present, the market value of Nordstrom is around us $7 billion 400 million.

Erich Joachimsthaler, chief executive of Vivaldi, a Consultancy Co operating with Nordstrom, said that once privatization is realized, Nordstrom may start restructuring its business, which is a more difficult move for listed companies.

He said privatization is the right move for Nordstrom.

Gordon Haskett analyst Chuck Grom said that at present, Nordstrom's share price is $46, and retailers will need to raise $5 billion 450 million to $8 billion 190 million in debt financing.

Such a move is very positive in the retail business and bankruptcy wave.

If Wednesday's closing price of $40.48 is a standard, Nordstrom or 30% of the purchase premium, Nordstrom shares a total of about $8 billion 700 million, plus a net debt of $2 billion 100 million, and the Nordstrom family needs to pay $10 billion 800 million.

If the Nordstrom family completes the acquisition through loan financing, the maximum amount of the loan will be limited to four times the EBITDA of Nordstrom. At present, the EBITDA of Nordstrom is about 1 billion 600 million US dollars, that is to say, the Nordstrom family can raise up to 6 billion 500 million US dollars through loans.

Compared with the total purchase amount of $10 billion 800 million, there is still a gap of 4 billion 300 million dollars.

But since the Nordstrom family owns about 30% of the shares, they also need to raise additional $1 billion 600 million in cash to complete the paction.

There are also some failures in privatization. The performance of Neiman Marcus, a high-end department store chain, has been poor since its privatization in 2005. In March this year, the company said it was exploring various feasible options to improve its capital structure, including seeking overall sales to ease high debt.

Analysts' views diverge.

UBS Group AG analyst said in a report that taking into account the overall environment of the retail industry, they are cautious about the ability of Nordstrom to obtain financing.

They cited the example of the founder of Best Buy Co Inc (BBY.N), an electronics retailer, who tried to privatize the company in 2013, but failed, because he could not raise $2 billion 500 million to $3 billion in debt financing at that time.

Other analysts believe that privatization may be a little easier for Nordstrom.

Jan Rogers Kniffen, chief executive officer of J.Rogers Kniffen WWE, a retail consultancy, said: "Nordstrom is not a company highly dependent on loans. They have many real estate assets, so they have a relatively high possibility of privatization.

Founded in 1901, Nordstrom went public in 1971 and positioned high-end department stores for its excellent customer service.

Nordstrom has opened 354 stores in 40 states, including Nordstrom brand store and discount chain store Nordstrom Rack.

The company is also operating in Canada and Puerto Rico.

Other U.S. Department Store shares rose after news of Nordstrom's attempt to privatize.

On Thursday morning, shares of Dillard s Inc rose 6.3%, Messi's Department rose 3.3%, and Kohls Corp rose 1.3%.

But then it slipped.

The family and the board of directors set up a special group.

In the documents submitted to the securities and Exchange Commission of the United States, operators of Nordstrom said that the group formed for privatization measures had not yet formally applied.

The group members include chairman Emeritus Bruce Nordstrom, his sister Anne Gittinger, President James Nordstrom and joint CEO Blake, Peter and Erik Nordstrom..

The group members owned 31.2% of the company's shares and said they would not sell their shares to third parties or seek other pactions.

Gordon Haskett said that, given the ownership of the Nordstrom family, the chance of privatization would be even higher.

He said the ownership of the Nordstrom family seemed to satisfy the requirements of leveraged buyout pactions.

According to the world clothing and shoe net, the largest shareholder of the group is Bruce Nordstrom, which owns 16.9% of the tradable shares, followed by Gittinger Nordstrom (9.3%).

Peter and Blake Nordstrom own about 1.7% of the shares.

Nordstrom family members said in a filing document: "because of the changing retail environment, the group is evaluating whether Nordstrom will become more profitable in the long run as a private holding company."

The independent board of directors formed by the board of directors of the company said it had signed an agreement with the Nordstrom family members that the Nordstrom family would not take certain actions until January 31, 2019.

The Committee has hired Centerview Partners as its financial adviser and Sidley Austin as its legal adviser.

The Nordstrom family employs investment bank Moelis&Co (MC.N) as a financial adviser and Hogan Lovells as a legal adviser.

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