Ten months after officially announcing it is accepting bids for a potential sell, Cabela’s has inked a deal with rival hunting, fishing, and camping retailer Bass Pro Shops. The comprehensive buyout move of Bass Pro Shops sees it become one of the largest private specialty retailer selling outdoor merchandise relating to hunting, fishing, camping, boating, and shooting.
The $4.5B takeover price amounts to a $65.50 per share settlement in cash. Hedge fund Elliott Management’s claim of Cabela’s being substantially undervalued seems to have played into the deal, as the settlement represents a 19.2% premium over the share’s closing price on Friday. On Monday when the deal was announced, Cabela’s shares rose by 15% and closed at $63.18.
J.P. Morgan and Guggenheim Securities served as exclusive financial advisors to Bass Pro Shops and Cabela’s respectively. Both parties expect the deal to receive the federal stamp of approval in the first half of 2017.
Based in Sidney, Nebraska, Cabela’s started in 1961. Since then, it has grown into a corporate behemoth with 85 stores (at the end of 2015), 19,700 employees (at the end of 2015), shipping mail-order catalogs to 120 countries, and earning $4 billion in 2014. However, of recent, Cabela’s run has not been stellar. While hunting sales rose, the total number of sales at its brick and mortar stores fell by 8.1% in the first half of 2016.
The deal will take Cabela’s private after only going public in 2004. It is still unclear if Bass Pro Shops will keep the lights on Cabela’s active plan to double its number of current retail locations before 2019.
Despite launching a decade after Cabela’s in 1972, Missouri-based Bass Pro Shops has grown larger with 94 stores (at the end of 2015), 22,000 employees (at the end of 2015), and earning $4.45 billion in 2015. Current indications portend that Bass Pro Shops would not break up Cabela’s, with the official statement on the deal stating that Bass Pro Shops would “celebrate and grow” Cabela’s brand. Billionaire CEO and founder of Bass Pro Shops, Johnny Morris will remain as the CEO of the now vast outdoor retailing empire.
Tommy Milner, Cabela’s CEO, opined that following a “thorough strategic review,” Cabela’s board unanimously concluded that giving the green light to a Bass Pro Shops takeover is the “best path forward for Cabela’s, its shareholders, outfitters, and customers.”
Johnny Morris, CEO of Bass Pro Shops, maintained that Bass Pro Shops have “enormous admiration for Cabela’s, its founders and outfitters, and its loyal base of customers.”
Bass Pro Shops intends to honor Cabela’s customer rewards even after the buyout. Bass Pro Shops also intends to continue to maintain important bases of operations of Cabela’s in Sidney and Lincoln, where Cabela’s has maintained a presence for decades.
