Shares of Nordstrom JWN climbed on Wednesday after reports surfaced that the department store chain would once again consider taking on a private equity client in order to fund a buyout.
CNBC first reported that Nordstrom family members are close to picking an investment firm to help the family facilitate a buyout of the publicly traded company, of which they own roughly 31%. In the potential deal, Leonard Green & Partners would supply roughly $1 billion to the Nordstrom family to help fund a deal to take the company private.
Nordstrom’s shares popped 6.1% premarket and have since surged over 6.02% in morning trading Wednesday. Still, the historic U.S. department store sits almost $15 below its 52-week high of $62.83 per share.
The company first announced it would consider taking the company private in June. Nordstrom’s statement noted that the family was looking into the possibility of acquiring 100% of JWN’s outstanding shares of common stock.
Talk surrounding Nordstrom’s possible private buyout continued in early August, when it was reported that the family was in talks with KKR KKR, Apollo APO, and Leonard Green. Renewed buyout speculation seems to have piqued investors’ interests on Wednesday, but the privet equity deal has not been finalized.
The department store giant with a market cap of roughly $7.9 billion is also reportedly in talks with banks to raise around $8 billion in debt in order to completely finance the deal to go private.
Nordstrom has seen its stock price fluctuate since the beginning of the year as it tries to navigate the changing retail waters. Now, it seems that the Nordstrom family thinks that it would be able to make changes and investments that help the chain adapt without having to worry about negative, short-term shareholder reactions.
The renewed energy to go private comes only two days after the company announced it will debut a new concept store in California in early October. Branded “Nordstrom Local,” the company won’t even sell clothes at the new store, opting instead to focus on personal styling and consultations (also read: Nordstrom's New Inventory-Free Concept is Risky--But Just May Work).
Nordstrom wants to experiment and evolve in the dynamic retail landscape, where these new age retail ideas have started to catch on. Yet, shares of Nordstrom tanked around 5% on Monday after the company made the Nordstrom Local announcement.
Other Department Stores
Shares of Nordstrom’s biggest retail peers, including Macy’s M and Dillard’s DDS, experienced marginal gains on Wednesday. The SPDR S&P Retail ETF XRT saw its stock price climb over 1%, while shares of the Direxion Daily Retail Bull 2x Shares ETF RETL popped 3.05%.
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