Nordstrom Closes in on Private Equity Deal With Leonard Green & Partners

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The Nordstrom family may be one step closer to taking the company private.

Sources close to the matter say the family is closing in on a deal with private equity firm Leonard Green & Partners for about $1 billion to fund a buyout of the Nordstrom chain, according to CNBC.

In June, a Nordstrom family group, announced plans to explore the possibility of taking the retailer private. The group, which holds just over 30 percent of the company’s stock, is comprised of Co-Presidents Blake W. Nordstrom, Peter E. Nordstrom, and Erik B. Nordstrom, President of Stores James F. Nordstrom, Chairman Emeritus Bruce A. Nordstrom, and Anne E. Gittinger.

No deal has been signed, and the family group has also reportedly had discussions with other private equity firms like Apollo Global Management LLC and KKR & Co LLP during the process.

The Nordstrom family is also looking to raise $7 billion to $8 billion in debt to finance the buyout, which it would use to submit a bid as early as the end of the month, these unnamed sources said.

As a private company, Nordstrom would be able to undertake major changes needed to keep apace with the changing consumer and retail dynamics, like opening stores with no product, as it announced it will do earlier this week, without having answer to an unfavorable reaction from the market, which it received in response.

While this ability to operate freely would be a benefit, it could come at a cost. The headlines have been filled with stories of retailers in dire straits as a result of private equity deals. Neiman Marcus and J. Crew are struggling under debt while chains like Rue21 and Payless ShoeSource finally had to succumb to bankruptcy filings as a result of theirs.

[Read more about the pros and cons of going private: Nordstrom’s Transformation Hangs on a Private Equity Deal—Or Does It?]

Should the family be successful in their bid, sources say expect the store to set about bolstering its e-commerce capabilities, shaking up its retail fleet and adding to the Nordstrom Rack chain.

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