Dive Brief:
- Taking on what is known as a poison pill strategy, Nordstrom on Tuesday announced it had adopted a limited duration shareholder rights plan lasting until Sept. 19, 2023, according to a company press release.
- The plan was enacted to protect Nordstrom from an entity or person gaining control of the company through “open-market accumulation or other means without payment of an adequate control premium,” per the release. The shareholder rights to purchase additional stock at a 50% discount are enabled if someone acquires 10% or more of Nordstrom’s shares in a transaction not approved by its board. The same applies in the scenario of an unapproved merger or other business combination.
- Although Nordstrom noted this news was not in response to any takeover bid or proposals, it comes just weeks after Mexican department store company El Puerto de Liverpool acquired a 9.9% stake in the retailer.
Dive Insight:
Nordstrom’s latest move indicates it is prepared to defend itself from a hostile takeover.
“The Rights Plan also helps ensure that the Board has sufficient time to make informed, deliberate decisions that are in the best interests of the Company and all Nordstrom shareholders,” the company said in a statement. “The Rights Plan has not been adopted in response to any specific takeover bid or other proposal to acquire control of the Company, and is not intended to deter offers that are fair and otherwise in the best interests of all Nordstrom shareholders.”
According to El Puerto de Liverpool, the retailer’s recent stake in Nordstrom represented an attractive opportunity to diversify its geographic assets, per a company press release.
Nordstrom beat Q2 expectations in August, with net sales rising 12% year over year and digital sales increasing by 6.3%. The company did lower its outlook based on diminished traffic and demand at its off-price brand Rack, expecting full-year sales to increase 5% to 7%, down from its previous estimate of 6% to 8%.
The move is not new for the industry. In February, Kohl’s adopted a poison pill strategy after receiving two unsolicited acquisition bids. Francesca’s also enacted a shareholder rights plan in 2019 after a firm acquired about 22% of the company.
