Are you a verified shareholder of Nordstrom common stock (NYSE: JWN)? Nordstrom’s recent going-private merger orchestrated by company insiders means you and thousands of other U.S. stockholders could be entitled to compensation. Find out your rights »
WHAT’S THE ISSUE?
Hagens Berman’s investor protection litigation team filed a class-action shareholder lawsuit against Nordstrom (NYSE: JWN) accusing it and other defendants of an unlawful going-private merger orchestrated by Nordstrom insiders. Attorneys say insiders proposed the merger and sought an inadequate price after agreeing amongst themselves to vote against alternative transactions before seeking approval from Nordstrom’s Board of Directors, violating the Anti-Takeover Statute of Washington state’s Business Corporations Act. The class action calls the merger “substantively and procedurally unfair to Nordstrom’s public stockholders.”
WHICH NORSTROM STOCKHOLDERS ARE AFFECTED?
Affected investors include all public stockholders of Nordstrom common stock. If you own shares of Norstrom, find our your investor rights and learn more about potential compensation »
ABOUT THE NORDSTROM MERGER SHAREHOLDER LAWSUIT
The class action brings claims against Nordstrom, members of the Nordstrom founding family and El Puerto de Liverpool, a Mexican retailer, who collectively own 43% of Nordstrom’s stock. The lawsuit states that these insiders moved to acquire the company at an inadequate price of $24.25 per share, “a product of a flawed process,” according to the class action.
The lawsuit accuses the buyer group of “leveraging its controlling position and inside knowledge” to the detriment of Nordstrom’s public stockholders, and that the price offered represents a negative discount compared to the stock’s trading price shortly before the agreement and failed to reflect the stock’s intrinsic value and recent positive performance.
The lawsuit contains redacted information pertaining to the board’s actions to pursue a take-private transaction and private negotiations with the Nordstrom Brothers, Morgan Stanley and Centerview in early 2024 prior to the stock price falling. The company publicly disclosed the Nordstrom Brothers’ interest in pursuing a take-private transaction and the formation of the Special Committee in April 2024, violating standstills, according to the lawsuit.
Morningstar Equity Research analysts noted that “as Nordstrom’s shares trade at about half our per-share $38.50 fair value estimate, we are concerned that an offer price may not provide full value to shareholders,” writing that “Nordstrom’s sales and operating margins will improve in 2025 so it would be unfair to shareholders if the insiders buy the company at a valuation that we believe is only temporarily depressed.”
NORDSTROM INVESTORS’ CLAIMS EXPLAINED
The lawsuit brings claims of violation of Washington’s Anti-Takeover Statute and counts of breach of fiduciary duty against the buyer group and the director defendants.
Washington Business Corporations Act states if stockholders collectively owning more than 10% of a company’s outstanding shares reach an agreement among themselves with respect to acquiring or voting shares before receiving board approval, a subsequent merger must be approved by stockholders holding two-thirds of the company’s shares, excluding the shares owned by the buyers.
The lawsuit alleges the board’s purported approval of the buyer group’s formation was ineffective because the Buyer Group had already formed an agreement, thereby becoming an “acquiring person” prior to that date, meaning the merger must comply with the heightened voting requirement, demanding approval by two-thirds of the disinterested stockholders, according to attorneys for shareholders.
NORDSTROM MERGER’S IMPACT ON PUBLIC SHAREHOLDERS
According to the class-action lawsuit for Nordstrom shareholders, the Merger is unfair to the Nordstrom’s public stockholders beyond its violation of the Anti-Takeover Statute:
- Stockholders owning approximately 43% of the company’s outstanding shares are rolling over their equity instead of accepting the $24.25 per share cash consideration. These stockholders include the company’s most knowledgeable and best-positioned stockholders to understand the company’s future prospect.
- The buyer group as constituted were jointly the company’s controlling stockholders. The mere presence of controlling stockholders on the other side of a transaction creates an inherently coercive environment. Here, the buyer group not only held a near majority of the outstanding shares but included the company’s top executives and the family that founded Nordstrom.
- The opportunistic nature of the merger is reflected in the company’s stock price and performance in the months leading up to the merger. The buyer group’s initial $23 offer was barely higher than the stock’s closing price of $22.82 that same day, and the company’s stock price reached $24.67 in mid-October 2024.
NO COST TO YOU
In no case will any class member ever be asked to pay any out-of-pocket sum. In the event Hagens Berman or any other firm obtains a settlement that provides benefits to class members, the court will decide a reasonable fee to be awarded to the class's legal team.
