Note: Originally published October 4, 2016.

 

Rumors have been swirling since the close of 2015 about a possible acquisition of Cabela’s by longtime rival Bass Pro Shops. The official announcement came yesterday, with Bass Pro paying $5.5 billion to gain control of its major competitor. It’s still unclear how the merger will affect the various stores and operations of the two companies, but Bass Pro has reassured the public that it would “grow and celebrate” the Cabela’s brand.

Reuters said on Sunday that the consortium of BPS, Goldman Sachs Group’s private equity arm, and Capital One Financial was in the lead to purchase the publicly traded Cabela’s. Unnamed firms have been competing with Bass Pro since the beginning of sales talks, but between investors’ worries over acquiring a firearm-related company and the actual cost of making such a purchase, BPS has been the frontrunner throughout the process.

Bass Pro finally agreed to buy Cabela’s for $65.50 per share, coming to a total value of $5.5 billion—a 19.2 percent premium, according to Fox Business. Johnny Morris, founder of Bass Pro and #403 on Forbes’ Billionaire List, will serve as CEO of the combined entity and will retain majority ownership.

Per a joint press release from BPS and Cabela’s:

“In addition, upon closing Bass Pro Shops will commence a multi-year partnership agreement with Capital One, National Association, a wholly owned national banking subsidiary of Capital One Financial Corporation, under which Capital One will originate and service the Cabela’s CLUB, Cabela’s co-branded credit card, and Bass Pro Shops will maintain a seamless integration between the credit card program and the combined companies’ retail operations and deep customer relationships. All Cabela’s CLUB points and Bass Pro Shops Outdoor Rewards points will be unaffected by the transactions, and customers can continue to use their credit cards as they were prior to the transaction. Capital One intends to continue to operate the Cabela’s CLUB servicing center in Lincoln, Nebraska.”

Many have feared what this merger would mean for Sidney, Nebraska, home of Cabela’s corporate headquarters. Sidney has 2,000 people employed by the retail company out of a total population of 6,800. Some speculated that Bass Pro would shutter the Sidney headquarters, consolidating the new company’s operations in Springfield, Missouri. The joint press release assuaged those fears somewhat, saying:

“Bass Pro Shops appreciates and understands the deep ties between Cabela’s and the community of Sidney, Nebraska. Dick, Mary, and Jim Cabela founded their company in Sidney in 1961, and the company has flourished with its base of operations there ever since. Bass Pro Shops intends to continue to maintain important bases of operations in Sidney and Lincoln and hopes to continue the very favorable connections to those communities and the Cabela’s team members residing there.”

It’s unclear what will happen to Cabela’s other facilities, though, or Bass Pro’s for that matter. Cabela’s alone operates some 85 retail stores, with 19,000 “outfitters” staffing them. However, the release did say, “Cabela’s stores, catalog business, and e-commerce operations will blend seamlessly with Bass Pro Shops and White River Marine Group.”

Cabela’s made a separate statement Monday afternoon concerning the merger. It read, in part:

“This transaction will create the truly premier retailer in outdoor sporting goods. Combining our two companies will enhance our ability to serve outdoor enthusiasts with complementary product offerings and an expanded geographic footprint. We are excited about the benefits and opportunities this transaction will provide for our customers and Outfitters.”

Rumors of the possible merger began circulating in November 2015. Cabela’s was reportedly put on the path to a buyout by Elliott Management, an activist hedge fund who holds an eleven percent stake in the company. In October 2015 Elliott Management disclosed its stake percentage in the company and called for it to “explore strategic alternatives.” Cabela’s began reaching out to private equity firms to solicit interest, according to Reuters.

BPS began preparing its offer, and in April 2016 Reuters reported that Bass Pro had partnered with Goldman Sachs Group’s private equity firm to provide the financial backing needed to outbid the other, unnamed competitors.

The companies’ merger is expected to be finalized in early 2017. To read the full press release from BPS and Cabela’s, click here.

 

 

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