Nordstrom, a century-old department store, has reached an agreement to be acquired and taken private by members of the Nordstrom family in collaboration with a Mexican retail group, in a significant deal valued at $6.25 billion. This acquisition comes as the retail industry faces increasing pressure from discount chains and various other competitors.

Being a private entity may provide the Nordstrom family with the flexibility needed to rejuvenate a department store brand that has been striving to boost its sales for several years now. Publicly traded companies often endure greater scrutiny, allowing Nordstrom a better opportunity to revitalize operations away from the pressures of public markets.

Under the terms of the agreement, Nordstrom shareholders will receive $24.25 in cash for each share they hold, translating to approximately $4 billion in total. This offer represents a 42% premium based on the company’s stock performance as of March 18, coinciding with initial reports of potential transaction discussions. Furthermore, the purchasing group will assume more than $2 billion in existing Nordstrom debt.

Traditional department stores like Nordstrom have struggled against formidable competitors, including giants such as Walmart, Target, and various fast-fashion retailers, as well as the ever-expanding marketplace of Amazon. Notably, Nordstrom’s rivals, including Macy’s and Kohl’s, have been urged by major investors to implement significant transformations to enhance profitability for stakeholders.

Over the past decade, Nordstrom’s sales have remained stagnant. In a significant operational shift, the company announced last year its decision to close all Canadian locations and lay off approximately 2,500 employees. This move marks the end of its Canadian venture that began in 2012 with its first store opening in Calgary in September 2014.

The latest acquisition offer exceeds the previous proposal of $23 per share that the Nordstrom family and El Puerto de Liverpool, the Mexican retail group, submitted in September. Additionally, the board plans to authorize a special dividend of up to 25 cents per share, contingent upon the cash available immediately before and subject to the successful completion of the acquisition.

The transaction is slated for completion in the first half of 2025, moment at which the company’s stock will be removed from public trading. Neil Saunders, Managing Director of GlobalData, noted that while a change in ownership may not resolve every issue facing the department store, it will give the family and its partners the ability to adopt a long-term strategy, making necessary investments away from the immediate pressures of public shareholder expectations.

The board of directors has unanimously approved the proposed acquisition, although Erik and Pete Nordstrom, who are part of the Nordstrom family, recused themselves from the voting process. Once the acquisition is finalized, the Nordstrom family will hold the majority ownership in the company.

Erik and Pete Nordstrom represent the fourth generation of leadership in the company, which was originally founded in 1901 as a shoe store. Erik currently serves as the chief executive, while Peter holds the position of president. The company has opened 23 new stores this year, bringing the total to 381 Nordstrom and Nordstrom Rack stores across the United States.

Despite a 1.5% decline in shares on Monday, Nordstrom’s stock has increased by 34% this year amid takeover speculation, though it remains considerably lower than its post-pandemic high of over $40 per share. Earlier this year, Bruce Nordstrom, a prominent retail leader who played a key role in transforming the family retail business into a national upscale brand, passed away at 90. He, along with other family members, had attempted to take the company private in 2017 by proposing a buyout of the 70% of shares they did not previously own. However, those negotiations did not succeed in 2018, leading to the recent resurgence of buyout discussions initiated by his sons, culminating in the announcement made on Monday.