Nordstrom look to PE

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The Nordstrom family want to take the company that bears their name private.

Hello private equity

Nordstrom is a luxury department store chain, with a footprint across the US.

Currently, the family owns around 30% of the company and now they’re in talks with private equity firm Leonard Partners to fund a buyout. The aim is to raise around $1bn from private equity.

Banking on success

Meanwhile, they’re also talking to banks: the family want around an $8bn loan to fund the rest of the deal.

It’s all part of the plan

Taking the company private means the family won’t need to worry about immediate shareholder reactions. A good example is when the company announced that some of its shops would no longer stock merchandise: share prices dipped immediately.

Being private, they can focus instead on long term goals: beefing up the digital sales channel; mothballing loss making outlets; and rolling out its discount chain are all part of the plan. Further investment in its online offering in particular is something investors have long sought, given the intense competition from Amazon.

But

Retail leverage buyouts haven’t done too well recently.

Retailers that have been acquired in this way have struggled to invest in growth strategies: they’ve been burdened down with the debt that was used to finance their acquisition.

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