Bass Pro Shops hooks Cabela's in $5.5 billion deal

Mon Oct 3, 2016 9:07pm EDT
 
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By Abhijith Ganapavaram and Sruthi Shankar

(Reuters) - Bass Pro Shops said on Monday it will acquire Cabela's Inc (CAB.N: Quote) for $5.5 billion, combining two meccas for outdoor enthusiasts, even as the deal may face antitrust scrutiny given that the hunting and fishing retailers overlap in several U.S. states.

The deal, first reported by Reuters, will combine Cabela's 85 stores, which have a stronger U.S. Northwest presence, with Bass Pro's roughly 100 stores that are concentrated in the U.S. Southeast.

Their overlap in Texas, Missouri and Kansas will likely raise antitrust concerns.

"Both Cabela's and Bass Pro Shops used promotions to drive store traffic and market share, especially in contested geographic regions. As a combined entity, we see potential for a more rational promotional environment to emerge, benefiting all industry participants, "D. A. Davidson & Co said in a research note.

Cabela's had said it would explore a sale last December after pressure from activist hedge fund Elliott Management Corp, which said the shares were undervalued.

Cabela's shares ended up 15 percent at $63.18 on the New York Stock Exchange, close to the $65.50 per share in cash that the deal with Bass Pro values the company.

Elliott now stands to make a profit of $419.2 million, nearly double what it paid to buy an 11.1 percent stake in the company, according to regulatory filings.

Sydney, Nebraska-based Cabela's and Springfield, Missouri-based Bass Pro have been serving outdoor enthusiasts since their respective foundings in 1961 and 1971.   Continued...

 
A customer looks through the in-store sales advertisements inside a Cabela's store on the shopping day dubbed "Black Friday" in Fort Worth, Texas November 27, 2009. REUTERS/Jessica Rinaldi