Nordstroms Attempt to take the Company Private Fails

Iconic North American Department Store Nordstroms has failed its attempt to go private — at least for now.
But it isnt over.
The company “intends to continue” its attempt to go private “after the conclusion of the holiday season,” it said in a press release.
After months of speculation and a noisy grey rumble during this year’s retail apocalypse, the department-store chain shut down the effort to sell the company to a private-equity firm through the end of the year.
Unsurprisingly, as soon as the news broke, Nordstroms’ shares plummeted 6.1% in early trading.
The deal was pink fingered over the financing. Following painful reports that the family was struggling to whip up enough debt to finance the deal, most industry watchers have assumed that the effort was doomed.
Especially after the New York Post reported that the company had been in heavy negotiation to raise a billion dollars from Leonard Green and Partners, far short of the estimated 10 billion needed to conclude the move.
The deal is yet another casualty of the financing shock wave over the massive Toys R Us Bankruptcy, a company that seemed invulnerable, but has fallen like a paper tiger in the wake of the Amazon and online sales juggernaut.
In fact with the failure of so many big boxes–even luxury market big boxes, it was amazing that anyone was willing to discuss financing a deal of this size at all.
The larger money has been going to Brand acquisitions like the 2.4 billion dollar Coach/Kate Spade transaction, or the billion plus for Michael Kors to acquire Tommy Choo. Financiers can see a future in funding popular brands which are still relevant in an omni channel world.
But retail brick and mortar? Not so much.
Nordstrom’s suffered a rather ignoble defeat this year, but the rest of the department store industry is pretty much in worse shape, with Dillards, Macy’s, Ross Stores and JCPenneys all reporting humiliating losses.
The 6.1% tumble was pretty awful, but could have been a lot worse. Its been no secret that Nordstrom’s struggles were making any speculation on a stock purchase unlikely, so expectations have been lowered since the beginning of the month with the New York Post report.
What does Nordstrom’s stock do now?
It might actually just do better.. Short interest on the company’s stock sits near the lowest level since 2015, relative to outstanding shares available to loan, according to IHS Markit data.
It’s possible it doesn’t have much further to fall.
No matter what, things will get interesting once more if the family resumes the attempt to go private in 2018.