Barclays updated its rating on Nordstrom Inc (NYSE: NYSE:JWN) shares to ‘Equal Weight’ from ‘Underweight’ on Thursday, a move that follows a take-private proposal by founding Nordstrom family members in partnership with Mexican retailer El Puerto de Liverpool.
“While there is still some uncertainty around the transaction given the required 2/3 shareholder vote, we believe it is appropriate to step aside on our Underweight rating,” Barclays analysts wrote.
The investment bank believes that taking Nordstrom private is “likely the right thing for the business longer-term,” however, it does not have a view on which way the remaining votes will land.
JWN shares climbed 1% in premarket trading.
The proposal, submitted to the Special Committee on September 3, 2024, suggests a buyout at $23.00 per share. This offer is marginally above the September 3 closing price of $22.82 and represents a significant 34.8% premium over the $17.06 price on March 18, 2024, which the company regards as unaffected by the transaction news.
The buying group, which includes the Nordstrom family and El Puerto de Liverpool, collectively owns 43% of the outstanding shares, with the family holding 33.4% and the Mexican retailer 9.6%.
Barclays has also adjusted its price target for Nordstrom to $23, up from the previous $18. This new target is based on 11.25 times the estimated earnings per share (EPS) for the calendar year 2026, which is forecasted at $2.04 – roughly in line with JWN’s current earnings multiple.
Nordstrom said in a Wednesday statement that a special committee will evaluate the offer “in consultation with independent financial and legal advisors to determine the course of action that is in the best interests of Nordstrom and all shareholders.”
The company, founded in 1901, remained a private company for 70 years before going public. In 2018, the Nordstrom family made an unsuccessful bid to take the company private. The current proposal, which includes $250 million in bank financing, would give the family 50.1 percent ownership.