Macy's Acquires Nordstrom | Mergers & Acquisitions Pitch

Our attempt was to pitch and acquisition of Nordstrom to Macy's to form a retail conglomerate. Emphasizing consumer trends and synergies between the two companies. Data provided from multiple sources mainly Deloitte's, "The Great Retail Bifurcation".

1. Macy’s To Acquire Nordstrom
Creating National Department Store Leader
April 27, 2018

2. Industry Overview1
Macy’s Overview2
Proposed Targets3
Nordstrom4
Valuations5
The 3 Big Trends in Retail3
Agenda

3. Industry Overview1
Macroeconomic Overview
Financial Overview
PEST Analysis
Industry Overview

4. §U.S. GDP growth has rebounded from negative growth
since the recession at a range of 1.5-2.5% annually(3);
§is forecast to grow at 3% by the end of this year due to
recent tax reforms(3)
§Net worth of households has more than doubled since
its recession low of $45 trillion in 2009 to more than $95
trillion and continues growing(3)
GDP Growth
Median Income
§After a steady decline since 2007, median income had
bounced back and stood at ~$58k as of 2016(1)
§In 2017, consumer confidence has been the highest it’s
ever been since 2000 at 96.8(1)
§Unemployment rate is at 16 year lows of 4.1%(2)
Macroeconomics Overview
Sources: (1) The U.S. Census Bureau Data
(2) Bloomberg
(3) IBIS World

5. -8.00%
-7.00%
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
$0
$50
$100
$150
$200
$250
$300
2005200620072008200920102011201220132014201520162017
Despite positive macroeconomics backdrop and increasing retail
sales, the department store industry is in the declining stage of its life
cycle
Department store revenue declined steadily
2005-2017$ in billions
Retail Industry:
§Growth in retail spending has outpaced GDP
growth and has risen every year since 2009
§Retail sales is growing at 3.7% in 2017
compared to 2.3% for GDP
Department store industry growth, however, is
trending downward:
§Over the five years to 2017, industry revenue
declined at an annualized rate of 3.3%
§Profit margin stands low at 2.6%, having
dropped from 5.4% in 2012
RevenueGrowth Rate
Industry Overview
Sources: IBIS World

6. Political Landscape
Unideal in emerging countries
§Big international retailers are faced with anti-trust,
government, and red tapes issues
Economics Landscape
Socio-cultural Landscape
Rapid change in
demographics and consumer
behaviors
§Disposable income are spent on alternate spending
options, such as autos, electronics, entertainments.
§Demand from consumers aged 26-45 remains stable
but will shrink in the coming years as tech-savvy age
group conduct more online services
§Millennials want more personalized services
Technological Landscape
Accelerated
§Macro: strengthened labor force and wage growth,
positive GDP growth, and expanding valuation
§Micro: The bulk of retail revenues are split among
off-price, premier, or super-center retailers
§Intense competition posed by E-commerce retailers
§96% of Americans are shopping online and 36 percent
of their shopping budgets to e-commerce
PEST Analysis
Sources: IBIS World

7. 1 Macy’s Overview2
Business Overview
Financial Overview
SWOT Analysis
Macy’s Overview

8. Macy’s is a premier omni-channel retailer with iconic brands that serves customers through outstanding stores, dynamic
online sites and mobile apps.
§Founded in 1830
§Headquartered in Cincinnati, Ohio
§Employees: 130,000
§Operations Macy’s, Bloomingdales, and Blue-mercury –operate in 44 states as well as Macys.com,
Bloomingdales.com and bluemercury.com
§The largest retail brand
of Macy’s Inc.
§Offersaffordable private
brands
§Off-price approach:
Backstage & Last Call
§Upscale department store owned by
Macy’s
§Offers high-endand designers’
assortments.
§Federated-Macy’s Merger in 1994
§A high-growth, iconic beauty
retail chain and cosmetic
brand developerfounded in
1999
§Acquired by Macy’s Inc. in
2015(1)
Macy’s Business Mix
Business Overview
Sources: Macy’s Fact Book 2017

9. 27,686 27,931 28,105 27,079 25,778 24,837
3,717 3,780 3,915 3,159 2,695 2,532
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
201220132014201520162017
RevenueEBITDANet Income
38%
23%
23%
16%Women's Accessories, Intinamte Apparel,
Shoes, Cosmetics, and Fragrances
Women's Apparel
Men's and Children's
Home/Miscellaneous
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
May-13Aug-13Nov-13Feb-14May-14Aug-14Nov-14Feb-15May-15Aug-15Nov-15Feb-16May-16Aug-16Nov-16Feb-17May-17Aug-17Nov-17Feb-18
660
55
137
673
55
101
737
54
77
0100200300400500600700800
Macy's
Bloomingdale's
bluemercury
201520162017
2017 Sales by Products Segmentation
Sales Contraction 2012 -20172017 Macy’s Stock Price Compressed Since 2015
In $millions
Macy’s Financial Overview
Sources: Company’s SEC Filing 2017

10. Strengths
ThreatsOpportunities
Weakness
§Diversified customer base due to
strong promotional and marketing
activities
§Broad range of advertising channels
§Omni-channel selling
§Lower inventory turnover than
competitors
§Lack of presence in international
markets
§Decline in revenue growth and
operating margin
§Rise of ecommerce
§Targeting new audiences and
consumers
§Low globalized environment in retails
§Shrinking middle class
§Intense competition
§Changing fashion trends
§Increase in costs of real estate
SWOT Analysis
Sources: Company’s SEC Filing 2017

11. Off-price or
Premier
Tech &
CustomizationE-Commerce
123
The 3 Big Trends in Retail3
The 3 Big Trends

12. Off-
Price
Super
Center
Dept.
Stores
PremierCustom.
Selection
Consumers
< $50k
$50k-
$100k
>$100k
Income Cohort§2016: Income for the top 20%
has grown 1,425% more than
the lowest cohort.
§Low and middle income cohorts
have very little exposure to the
appreciation of stocks.
§The top 20% own 93% of
the stock in the S&P500
§Nondiscretionary expenses are
increasing, hurting the lower
cohorts the most.
§Off-price retailers —TJX, Ross
Stores and Burlington —are
expected to see incremental
sales growth of $18B to $19B by
2021
Macy’s is faced with intense competition as demands are polarized
among supercenter, off-price, and premier retailers
80% of
Population
20% of
Population
The 3 Big Trends

13. Retailers are heavily invested in technological enhancement and
customization to improve customer experience
Modi-Face Skin Artificial Intelligence:
§Developed by dermatologists to measure the precise
state of skin and observe potential skin changes in live
video
§Has the ability to detect and quantify minute changes in
skin, such as dark spots, unevenness
This App can visualize the changes before and after the use
of ANY beauty product.
L'Oréal's Kerastase Hair Coach:
A brush that consists of the following:
§A microphone to measure fizziness, dryness, split
ends, and breakage
§3-Axis load cells that measure applied force on the
scalp while brushing
Audits hair in order to recommend customized products for
improving haircare.
SEO, In-Store Experience, Fashion-tech
Amazon, Alibaba, JD.com, Zalando:
§All use AI enhancements to help generate precise
product search results
Burberry:
§Launched an augmented reality feature design to
interact with users camera feeds to digitally redecorate
their surroundings with Burberry inspired drawings
Ralph Lauren:
§Smart Shirt: Nylon compression tee, made with silver
fibers that can track a persons biometrics
Beauty Retailers
The 3 Big Trends
Sources:Complex, The Business in Fashion, Prescouter

14. Expansion into E-commerce has been pervasive across the entire
retail industry
E-commerce Growth Outlook (1)
§Revenue for the E-commerce
industry rose at an annualized rate of
12.3% from 2012 to 2017
§2017 alone saw a 13.4% increase in
revenue, which pushed the total
revenue of the industry to $452.3B
§Over the next five years building up
to 2022, the industry is expected to
continue to grow at an annualized
rate of 9.3%, increasing the overall
revenue of the industry to $704.1B
$310M$50-$75M$52M$70M$3.3B
Jun 2017Mar 2017Feb 2017
Moosejaw
Jan 2017Aug 2016
Walmart spent $3.3B in August 2016 to acquire online retailer Jet.
Since then, it has made at least four e-commerce acquisitions (2)
$13.7B
Aug 2017
$180 M
Feb 2011
E-commerce giant
Amazon acquired
Wholefoods to
benefit from hybrid
business model (2)
Hautelook, a private
sale online retailer,
was acquired by
Nordstrom(2)
The 3 Big Trends
Sources: (1) IBIS World
(2) Capstone Partners E-commerce M&A Research

15. Proposed Targets3
Proposed Targets

16. Kynetic
Off Price E-Commerce Tech DisruptorOff Price E-Commerce Tech Disruptor
Stitch Fix
Business
Overview
Online styling service that delivers one-to-one personalization to
clients. Stitch Fix uses a combination of data science, analytics
and human judgement to create personalized outfits for clients
based on their style profile. Customer base is located in the US.
Kyneticoperates three e-commerce businesses: RueLaLa,
Fanatics, and Shop Runner. Kyneticappeals to off price,
premium, and sports based merchandising while maintaining
fast delivery methods.
Synergistic
Benefits
Value Chain Efficiency:TommyHilfiger and Calvin Klein both
serve to Macy’s and Stitchfix. Inventory management costs
decline from higher inventory turnover
Increased Online Sales:operations are not limited to physical
locations. Macy’s will expand its touchpoints with consumers
International Presence:RueLaLaoperates in CAN, AUS, UK,
CHN. Macy’s can tap into the low-globalized department store
environment
Product Lines:RueLaLasells kids’, home décor, and travel
experiences to its audiences. Macy’s can increase turnover on
illiquid furniture items
Risks
Sustainabilityof Price Model:Monthly subscription models
work best with consumable goods. Stitch Fix relies on monthly
subscriptions for sales
InternationalCybersecurity:Internationalservers are prone to
attacks in host country. Macy’s must hire third party specialists
within respective countries
Proposed Targets

17. Nordstrom4
Business Overview
Financial Highlight
Strategic Rationale
Nordstrom

18. 2017 Sales by Products Segmentation
Nordstrom is one of the leading fashion retailers that offers clothing, shoes, and accessories for men, women, and children.
Nordstrom has presence in 40 states and Canada with 369 brick and mortar stores. Nordstrom also offers a personalized styling
services and access to discounted off-price fashion.
§Founded in 1901 as a retail shoe business in Seattle, Washington.
§Company’s niche specialty: leading retailer of national and exclusive/private brand apparel, shoes, accessories and cosmetics
in the better department store and off-price channels
§Full-price
§117 Nordstrom-branded full-line stores in the U.S
§Nordstrom.com & mobile app application
§Off-price
§235 off-price Nordstrom Rack stores
§Nordstromrack.com/HauteLookwebsite
§Other Retail
§Six Nordstrom Canada full-line stores
§Seven Trunk Club clubhouses & Trunkclub.com
§Two “Last Chance” clearance stores
§Two Jeffery Boutiques
Nordstrom has highly diversified business mix with strong online presence
36%
26%
19%
12%
4%
3%
Women's Apparel
Shoes
Men's Apparel
Women's Accessories
Children's Apparel
Others
Business Channels as of 2017
Business Overview
Sources: (1) Company’s SEC Filing

19. 12,540
13,506
14,437 14,757
15,478
1,780
1,813
1,723
1,647
1,592
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2013 2014 2015 2016 2017
Revenue EBITDA Net Income
CAGR 4.3%
Strong Sales Growth Rate 2013-2017SG&A contributes to decline in Net Income
§Over the course of five years to 2017, Nordstrom’s total revenue grew at CAGR of 4.3%.
§Other retail sales grew 60% in 2017 (Canada’s full-line Nordstrom, Trunk Club, and Jefferey Boutique), showing
positive results of the company’s geographic and technological expansion effort.
§Net income declined at rate of 9.85%, due to higher SG&A Expenses, including higher supply chain, marketing, and
technology expenses associated with the company’s growth initiatives
27.50%
28.00%
28.50%
29.00%
29.50%
30.00%
3,700
3,800
3,900
4,000
4,100
4,200
4,300
4,400
4,500
4,600
2015 2016 2017
SG&A Expense Percentage of Sales
Other Retail Sales
Sales
(in
millions)
2017614
2016554
2015378
In $millionsIn $millions
Financial Highlight

20. Leveraging Core Competencies
Increasing Market Power
Top Industry Leaders
Strategic Rationale

21. Optimal Operating Efficiency
Proforma Stores Under Management: 975
§Macy’s operates through third party distribution centers that are at risk of insolvency at times and underperformance.
§Nordstrom owns 6 distribution centers and 2 fulfillment centers. Macy’s can mitigate the risk of bottle neck.
§Nordstrom will also be able to convert some of Macy’s retail space.
Private Brand Expansion
Proforma Private Labels: 25
Customer Experience Improvement through Nordstrom’s Outstanding Customer Service
§Nordstrom provides customer with compelling price and value, fashion newness, quality of products, selection, convenience, technology, product
fulfillment, personalization and appealing, relevant store environments in top locations.
Technological Enhancement to Improve Sales and Customer Experience
§Trunk Club is a personal styling company using analytics to read customers’ preference, similar to Stitch Fix
§Bevyup, a CRM Platform, using predictive analytics in order to customize shopping experiences
§Bevyup& Trunk Club can be used as tools to exploit the $62B cosmetic industry
Strategic Rationale

22. Macy becomes a Top 5 U.S. department store leader with attractive growth
profile
§The combined entity enjoy greater
revenue from
§Customer base-expansion: e-
commerce buyers who are
millennials and tech-savvy
§Geographic diversification:
Exposure to Canada
§Additionally, bargaining power
toward suppliers and buyers will
improve as a result of the
concentration
§Both company would benefit from
economies of scope, reducing cost
per unit due to increased revenues
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Target
Dollar General
Dollar Tree
Pro Forma Macy's
Canadian Tire Corp
Macys Kohl's
Nordstrom
JC Penny
Sears
Hudson
Ollies
Dillards
Big Lots
Fred's Inc
Top 5Top 10
Enterprise Value
In $millionsStrategic Rationale

23. Macy’s Management Team
Karen M. Hoguet
CFO
Jeff Gennette
Chairman & CEO
Nordstrom’s Management Team
Robert B.
Harrison COO
Anne Bramman
CFO
BlakeW. Nordstrom
Co-President
ErikB.Norstrom
Co-President
CFO of Macy’s, Inc. since
1997. All of the company’s
finance and accounting
functions report to Hoguet.
Hoguet joined the company
as a senior consultant in
marketing and long-range
planning after leaving the
Boston Consulting Group in
1982.
Gennettewas elected CEO of
Macy’s, Inc. in March 2017
and assumed the role of
chairman in February 2018.
Gennettepreviously held the
role of president of Macy’s,
Inc. since 2014. He was chief
merchandising officer of
Macy’s, Inc., since February
2009.
Previously, R.B. served as
executive VP for finance,
president for stores, and
president and COO of Macy’s
West. R.B. was named
president and COO of Macy’s
Northwest in February 2006.
R.B. was chairman of
Robinsons-May, and served
as its senior vice president
and CFO.
CFO of Nordstrom, Inc.
since June 2, 2017. Ms.
Brammanserved as the
CFO and Senior Vice
President of Avery Dennison
Corporation from March 23,
2015 to March 20, 2017.
Previously, she served as
Senior VP and CFO of
Carnival Cruise Line at
Carnival Corporation.
Co-President of Nordstrom
Inc. since May 2015. Mr.
Nordstrom served as the
President of Nordstrom Inc.
from August 2000 to May
2015. He joined as an Officer
at Nordstrom Inc. in 1991. Mr.
Nordstrom has been
employed by Nordstrom Inc.
since June 1976.
Co-President of Nordstrom
Inc. since April 2015. Mr.
Nordstrom serves as a
Member of Executive Team
of Nordstrom Inc., and has
been its Officer since 1995.
Mr. Nordstrom served as
the President of Nordstrom
Direct at Nordstrom Inc.
since May 2014.
Strategic Rationale

24. 1
Valuations5
ComparableCompany Analysis
DiscountedCash Flow
Precedent Transaction Analysis
Football Field Analysis
Deal Financing
Valuations

25. Comparable Company Analysis ($ in millions)
Nordstrom (JWN)
Company Name Ticker
Current
Price
Shares Outst.Market Value Net Debt
LTM Minority
Interest
Enterprise
Value (EV)
LTM P/E FY1 P/E
LTM
EV/EBITDA
FY1
EV/EBITDA
LTM
EV/EBITDAR
LTM
EV/Sales
FY1
EV/Sales
Total Debt/
EBITDA
Unelevered
Beta
Macy's, Inc. M $30.7 305.9 9,391 4,617 (12) 13,996 5.7x 8.1x 5.3x 5.1x 4.9x 0.5x 0.5x 2.4x 0.5x
L Brands, Inc. LB $36.2 278.8 10,104 4,262 2 14,368 10.6x 11.5x 6.2x 6.8x 4.6x 1.1x 1.1x 2.5x 0.5x
PVH Corp. PVH $161.3 77 12,418 2,586 2 15,006 23.6x 17.7x 14.2x 11.7x 1.7x 1.7x 1.6x 2.9x 0.6x
The TJX Companies, Inc. TJX $83.5 627.1 52,331 (812) 0 51,519 20.7x 17.2x 10.9x 10.6x 8.2x 1.4x 1.4x 0.5x 0.7x
Low 5.7x 8.1x 5.3x 5.1x 1.7x 0.5x 0.5x 0.5x 0.5x
High 23.6x 17.7x 14.2x 11.7x 8.2x 1.7x 1.6x 2.9x 0.7x
Mean 15.2x 13.6x 9.2x 8.5x 4.8x 1.2x 1.1x 2.1x 0.6x
Median 15.7x 14.4x 8.6x 8.7x 4.8x 1.3x 1.2x 2.5x 0.6x
Nordstrom JWN $48.7 167.8 $8,172 $1,556 $0 $9,728 18.2x 13.7x 5.9x 6.0x 5.1x 0.6x 0.6x 1.7x 0.6x
Low High Mean Median Low High Mean Median Low High Mean Median Low High Mean Median
LTM P/E 5.7x 23.6x 15.2x 15.7x $2.62 4,065 11,944 8,224 8,445 1,556 2,509 10,388 6,668 6,889168 $14.93$61.83$39.69$41.00
FY1 P/E 8.1x 17.7x 13.6x 14.4x $3.44 6,231 11,774 9,432 9,861 1,556 4,675 10,218 7,876 8,305168 $27.83$60.82$46.88$49.43
LTM EV/EBITDA 5.3x 14.2x 9.2x 8.6x 1,592 8,438 22,606 14,567 13,612 1,556 6,882 21,050 13,011 12,056168 $40.96$125.30$77.45$71.76
FY1 EV/EBITDA 5.1x 11.7x 8.5x 8.7x 1,572 8,031 18,324 13,417 13,657 1,556 6,475 16,768 11,861 12,101168 $38.54$99.81$70.60$72.03
LTM EV/EBITDAR 1.7x 8.2x 4.8x 4.8x 1,842 3,101 15,052 8,920 8,765 1,556 1,545 13,496 7,364 7,209168 $9.19$80.33$43.84$42.91
LTM EV/Sales 0.5x 1.7x 1.2x 1.3x 15,478 7,739 26,313 18,187 19,348 1,556 6,183 24,757 16,631 17,792168 $36.80$147.36$98.99$105.90
FY 1 EV/ Sales 0.5x 1.6x 1.1x 1.2x 15,417 8,325 24,205 17,614 18,963 1,556 6,769 22,649 16,058 17,407168 $40.29$134.81$95.58$103.61
Median $36.80$99.81$70.60$71.76
Mean $29.79$101.47$67.58$69.52
Selected value range $67.58$71.76
Current price $48.7
Premium (discount) 39% 47%
to current price
Implied Market Value per shareMultiple Range Nordstrom
Data
Implied EV Net Debt
Share
Outs.
Implied Market Value
Comparable Companies Analysis

26. Nordstrom(JWN)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenue 12,54013,50614,43714,75715,478 15,47816,64517,26017,89918,561
Cost of Goods Sold 7,942 8,401 9,161 9,434 9,877 10,16810,54410,93411,33811,758
Gross Profit 4,598 5,105 5,276 5,323 5,601 5,310 6,101 6,327 6,561 6,803
Operating Expenses 3,272 3,588 3,957 4,159 4,508 4,410 4,573 4,742 4,918 5,100
EBIT 1,326 1,305 1,147 1,002 926 1,473 1,528 1,584 1,643 1,704
Income Tax Expense 520 512 442 483 414 405 420 436 452 468
EBIAT 806 793 705 519 512 1,068 1,108 1,149 1,191 1,235
Deferred Tax Liability 239 239 256 0 0 175 181 188 195 202
Capital Expenditures (803) (861)(1,082)(846) (731) (986)(1,023)(1,061)(1,100)(1,141)
Depreciation and Ammortization 444 498 560 631 655 630 653 677 702 728
Change in Working Capital 70 (46)1,120 462 291 417 432 448 465 482
Unlevered Free Cash Flow 616 715 (681) (158) 145 469 487 505 523 543
Present Value of Free Cash Flow $450 $448 $446 $444 $442
Historical Projected
Discounted Cash Flow

27. Assumptions
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenue Growth 7% 2% 5% 4% 4% 4% 4% 4%
Gross Profit Margin 37% 38% 37% 36% 36% 34% 37% 37% 37% 37%
EBIT Margin 11% 10% 8% 7% 6% 10% 9% 9% 9% 9%
Capital Expenditures -6% -6% -7% -6% -5% -6% -6% -6% -6% -6%
Depreciation and Ammortization 4% 4% 4% 4% 4% 4% 4% 4% 4% 4%
Change in Working Capital 1% 0% 8% 3% 2% 3% 3% 3% 3% 3%
Historical Projected
Sum of Free Cash Flow $2,230
Exit Multiple (EV/EBITDA) 5.9x
Terminal Value $14,347
Discounted Terminal Value $11,673
Implied Enterprise Value $13,903
Less: Net Debt $1,556
Less: Prefferred Shares $0
Less: Minority Interest $0
Implied Equity Value $12,347
Diluted Shares Outstanding 168
Implied Share Price 73.58$
Implied Share Price
Risk Free Rate 3.00%
Beta 0.71
Equity Risk Premium 5.00%
Cost of Equity 6.55%
Pre-Tax Cost of Debt 4.96%
After Tax Cost of Debt 2.7%
Equity Capitalization 38.6%
Debt Capitalization 61.4%
WACC 4.2%
Weighted Average Cost of Capital
Discounted Cash Flow

28. Sensitivity Analysis
1.9x 2.9x 3.9x 4.9x 5.9x 6.9x 7.9x 8.9x 9.9x
0% 31.26 45.60 59.94 74.28 88.62102.95117.29131.63145.97
1% 29.94 43.58 57.23 70.87 84.52 98.16111.81125.45139.10
2% 28.70 41.69 54.68 67.67 80.66 93.65106.64119.63132.62
3% 27.52 39.90 52.27 64.64 77.01 89.39101.76114.13126.51
4% 26.42 38.21 50.00 61.79 73.58 85.37 97.16108.95120.74
5% 25.37 36.61 47.85 59.09 70.34 81.58 92.82104.06115.30
6% 24.39 35.11 45.83 56.55 67.27 77.99 88.71 99.44110.16
7% 23.45 33.68 43.91 54.15 64.38 74.61 84.84 95.07105.30
8% 22.57 32.34 42.10 51.87 61.64 71.40 81.17 90.94100.70
Weighted Average Cost of Capital
Exit Multiple
Sensitivity Analysis

29. Precedent Transaction Analysis ($ in millions)
JWN
Target Acquiror
Announcement
Date
Exchange Ratio
Acquiror Price
1 Day Before
Announcement
Cash
Consideration
Offer Price for
Target
Target Price 1
Day Before
Announcement
Premium Equity ValueNet Debt
Total Net
Transaction
Value
LTM P/E Price/Book
LTM TV/
Sales
TV/LTM
EBITDA
Ann Inc. Ascena Retail Group 17-May-15 0.68 $14.21 $37.34 $47.00 $38.71 21.4% 2,354.8 (176.3) 2,211.1 31.5x 4.4x 0.9x 9.2x
Saks Incorporated Hudson Bay Company 29-Jul-13 - $16.07 $16.00 $16.00 $15.31 4.5% 2,406.3 296.8 2,705.7 47.4x 2.1x 0.8x 10.2x
Low High Mean Low High Mean Low High Mean Low High Mean
Premium 17.3% 21.4% 19.4% $47.00 10,818 11,144 10,981 1,556 9,262 9,588 9,425 168 $55.13 $57.07$56.10
LTM TV/ Sales 0.8x 0.9x 0.9x 15,478 12,382 13,930 13,156 1,556 10,826 12,374 11,600 168 $64.44 $73.66$69.05
TV/LTM EBITDA 9.2x 10.2x 9.7x 1,592 14,646 16,238 15,442 1,556 13,090 14,682 13,886 168 $77.92 $87.40$82.66
Median $64.44$73.66$69.05
Mean $65.83$72.71$69.27
Selected value range $64.44$69.05
Current price $48.70
Premium (discount) 32% 42%
to current price
Implied Equity Value Per ShareImplied Transaction ValueMultiple Range Implied Equity ValueNordstrom
Data
Assumed
Net Debt
Share Outs.
Precedent Transaction Analysis

30. February 24 2018:
Talks about “Going
Private” start
March 1 2018:
The company has completed the repurchase of 1.9M
shares, representing 1.13% for $86 million under the
buyback announced on February 17, 2017.
Expansion plans in Canada
March 5 2018:
Nordstrom deems offer inadequate at
$50 per share for the 79% of the
shares not owned by the Nordstrom
family
March 8, 2018:
Nordstrom completed the acquisition of
BevyUpand MessageYes
March 20 2018:
Nordstrom terminates discussions on
going private transaction with Bruce
A. Nordstrom
$50 per share has been rejected; deemed “too low” for acquisition
Corporate Timeline

31. 30 50 70 90 110 130 150 170
52 Week Range
Precedent Transaction Analysis
Comparable Company Analysis
Discounted Cash Flow Analysis
Offer of $50 per share by
Nordstrom family was rejected by
Nordstrom Inc.
We propose that Macy offer $58.4
per share of Nordstrom,
corresponding to a 20% premium
Football Field Analysis

32. 67.32%
32.68%
Macy's Nordstrom's
§We propose that Macy offer $58.44 per share of Nordstrom, corresponding to a 20% premium
§All cash transaction with Implied Transaction Value of $9.8B
§Capital would be raised through a mix of debt and equity: $3.1B or 32% debt and $6.6B or 68% equity
Debt Contribution
Industry LevelMacy' sNordstrom Macy' sNordstrom Macy' sNordstrom Total
2.9x 2.4x 1.7x2,5321,5921,2661,9103,176
Debt/EBITDA LTM EBITDA Implied Transaction Debt
New Company Equity
Implied Transaction Value 9,818
Debt Portion 3,176
Equity Portion 6,642
Current Macy's Price per share $30.00
Macy's Implied Shares to Issue 221
Consolidated Shares Outst. 514
Macy's 67.32%
Nordstrom's 32.68%
Equity Contribution
Deal Financing