Oct 17, 2017

Nordstrom's deal disarray

Dan Primack

A Nordstrom sign is seen at a shopping mall in Brea, Calif. (Jae C. Hong/AP)

Nordstrom said that it will halt its pursuit of a takeover, until at least after the holiday shopping season. The luxury retailer's market cap climbed to nearly $7.8 billion last month on news that it was in talks with private equity firm Leonard Green & Partners, but now has fallen back to $6.7 billion.

Why it matters: Because it's a reminder that not all leveraged loans are originated equally. Bloomberg reports that lenders were tying a 13% interest rate to prospective Nordstrom notes, thus souring the deal. Not only were banks spooked by luxury retail, but also recent events like the Toys "R" Us bankruptcy and a drop in the price of PE-backed PetSmart bonds.

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Bottom line: "Nordstrom announced that the going-private transaction is on hold and that they'll revisit it after the holidays. I doubt it. When M&A transactions slow down, they tend not to get revived in such a short time. Part of that is financial and part of that is psychological." — Richard Kestenbaum, Triangle Capital

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Nordstrom's deal disarray

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