* Offer of $65.50/share at 19.2 pct premium
* Bass Pro's store count to double in North America
* Bass Pro founder Morris to head combined company (Adds background, updates shares)
By Abhijith Ganapavaram
Oct 3 (Reuters) - Cabela's Inc said it agreed to be bought by Bass Pro Shops in a deal valued at $5.5 billion that will combine the top two hunting and fishing retailers in the United States.
Springfield, Missouri-based Bass Pro Shops, a long-time suitor of Cabela's, will nearly double its store count in North America through the addition of Cabela's 85 stores.
Cabela's, whose stores are known for their museum quality experience and taxidermy services, are located mostly in the U.S. Northwest, while Bass Pro's 99 stores are concentrated in the Northeast.
The deal comes nearly a year after activist hedge fund Elliott Management said it had taken an 11.1 percent stake in the company and called for a sale. Two months later, Cabela's said it would explore strategic alternatives.
Elliott stands to make $419.2 million from the deal, or nearly double of what the hedge fund paid for its stake, according to regulatory filings.
Cabela's has struggled with declining sales of apparel and footwear and has reported same-store sales growth in only one quarter in more than three years.
Bass Pro Shops, founded by Johnny Morris as a fishing gear shop in his dad's liquor store in the 1970s, expects the deal to help it offer a one-stop shop for entertainment, expert advice and shopping.
Morris will be the Chief Executive of the combined company.
Both companies have benefited from their significant hunting-gun businesses as the industry experiences swings in sales amid uncertainty around gun law changes.
Bass Pro's offer of $65.50 per share is a 19.2 percent premium to Cabela's close on Friday.
Shares of Cabela's jumped nearly 15 percent to $63.00 in morning trading, their highest in more than a year. Up to Friday close, they had risen 17 percent since the company said it was exploring strategic alternatives.
Reuters reported on Sunday that Bass Pro was closing in on a deal to buy the company.
Cabela's also agreed to sell its credit card business called "World's Foremost Bank" to Capital One Financial Corp, which will forge a 10-year partnership with Bass Pro Shops to issue credit cards to Cabela's customers.
Capital One spokeswoman Pam Girardo said terms of the transaction would not be disclosed.
Bass Pro Shops will finance the deal through preferred equity financing commitments of $1.8 billion from Goldman Sachs and $600 million Pamplona Capital Management.
J.P. Morgan Chase & Co advised Bass Pro Shops and Guggenheim Securities advised Cabela's. (Reporting by Abhijith Ganapavaram and Sruthi Shankar in Bengaluru and Michael Flaherty in New York; Editing by Anil D'Silva and Don Sebastian)