US-based Bass Pro Shops agreed today to buy its chief competitor Cabela’s, a national chain of outdoor retail stores, in a deal valued at $5.5bn. Under the agreement, shareholders of the publicly traded Cabela’s will receive $65.50 a share in cash – a premium of 19.2% to Cabela’s closing share price on September 30, 2016.
Bass Pro Shops has about 100 stores devoted to hunting and fishing across the US, and also owns the White River Marine Group (a new entity combining Tracker Marine and Fishing Holdings boat brands established earlier this year). Cabela’s has about 80 retail outlets in the US and Canada. Reuters news service has speculated that the deal bringing the two iconic brands together is likely to face antitrust scrutiny.
Bass Pro Shops founder and CEO Johnny Morris will continue as CEO and majority shareholder of the new entity, which will remain a private company with a continuing view of supporting the industry and conservation. "Today's announcement marks an exceptional opportunity to bring together three special companies with an abiding love for the outdoors and a passion for serving sportsmen and sportswomen," said Morris.
As previously reported by IBI, rumours began circulating about a year ago about Bass Pro’s possible interest in Cabela’s, but the smaller retailer said it was “exploring strategic alternatives”.
Forbes reported Bass Pro Shops' 2015 revenue at $4.5bn and listed the retailer as 94th on its list of America’s Largest Private Companies this year. Cabela’s revenues for the fiscal 2015 year ended 2 January 2016 (for a 53-month period), were just under $4bn, a 7% increase over the previous year. Cabela’s net income (after taxes) for the same period was $189m.
Bass Pro Shops secured preferred equity financing from the Merchant Banking Division of Goldman Sachs and Pamplona to facilitate the transaction. Goldman Sachs has committed $1.8bn and Pamplona has committed $600m for a total financing commitment of $2.4bn. Credit card company Capital One Financial Corp was also part of the transaction, agreeing to a 10-year deal to become the exclusive issuer of co-branded credit cards to Cabela's customers.