Shares of Nordstrom (NYSE: JWN) climbed 9.4% on Tuesday amid reports that the department store chain is exploring options to go private.
Reaching out to private equity firms
According to "people familiar with the matter" speaking with Reuters earlier today, Nordstrom's founding family has engaged investment banks Morgan Stanley and Centerview Partners to reach out to private equity firms to gauge their interest in a potential deal.
The timing of the news is no coincidence; Nordstrom shares dropped hard earlier this month after the company issued disappointing guidance that overshadowed slightly stronger-than-expected fiscal fourth-quarter results. Management warned that revenue could decline as much as 2% (the bottom end of its guidance range) in fiscal 2024.
CEO Erik Nordstrom said at that time, "We're laser-focused on efforts we know will drive growth and profitability across the business over the next few years, including new Rack store openings, Nordstrom digital growth, and increasing comp-store sales."
There are no guarantees that Nordstrom's efforts will result in a successful deal to go private. The company previously made multiple unsuccessful attempts to go private back in 2018, which it abandoned after potential lenders demanded extraordinarily high interest rates to support the move.
Nonetheless, it's hardly surprising to see shares rising today given the allure of a potentially juicy premium to go private.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
