Nordstrom takes ‘poison pill’ measure to avoid take over after announcing layoffs in Cedar Rapids

Nordstrom will lay off 231 people at its Cedar Rapids distribution center effective October 18.
Published: Sep. 22, 2022 at 11:18 AM CDT
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CEDAR RAPIDS, Iowa (KCRG) - Nordstrom Inc. adopted a “poison pill” this week, just a day after announcing more than 200 layoffs at a Cedar Rapids distribution center.

The move allows existing shareholders the chance to buy more shares at a discount, which the company hopes will allow it to avoid any potential hostile takeovers.

Bloomberg reports the retailer’s board approved the measure, known as a shareholder rights plan, just after a Mexican company, El Puerto de Liverpool SAB, disclosed a 9.9 percent stake in the company, making it the second-largest shareholder.

However, in a regulatory filing last week, El Puerto de Liverpool SAB said it is just trying to diversify its assets, not take steps toward a potential takeover of Nordstrom.

“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,” Nordstrom wrote in a statement.

GlobalData analyst Neil Saunders told Bloomberg Nordstrom’s board is trying to make a point that the business is not for sale, so executives at the stores can focus on the business.

Nordstrom cut its full-year outlook last month, just before announcing the job cuts in Cedar Rapids earlier this week. The company’s shares fell 15 percent this year.

“You wouldn’t have to be a gigantic company now to buy a controlling stake in Nordstrom because the stock price is so low,” Morningstar analyst David Swartz told Bloomberg.

The company’s shareholder rights plan is effective immediately and expires on Sept. 19, 2023.