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Cabela’s shares rocket after US$5.5bn tie-up with Bass Pro Shops

Monday, October 3, 2016 7:09
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Shares in Cabela’s Inc (NYSE:CAB) gained 15% in pre-market trading after the firm announced that it had agreed a deal to be acquired by fellow outdoor recreation retailer, Bass Pro Shops.

The deal – valued at US$5.5bn – will see Bass pay US$65.50 for each of Cabela share in issue, just shy of a 20% premium compared to Friday’s closing price.

Privately-held Bass Pro Shops’ bid prevailed over a rival offer from private equity firm Sycamore Partners.

Industry experts have suggested that the tie-up between two of the US’ largest fishing and hunting retailers could face antitrust scrutiny.

Cabela’s co-branded credit card will now be serviced by Capital One Financial (NYSE:COF) after it agreed a multiyear deal with Bass, with Cabela’s CLUB points remaining unaffected.

Shares in Nebraska-based Cabela’s were already up 18% in the year to Friday (September 30).

As the wider industry has struggled to compete with the likes of (NASDAQ:AMZN) in recent years, both Cabela’s and Bass have bucked the trend.

Both have marketed themselves as one-stop shops for entertainment, expert advice and shopping, as well as decorating their stores to look something more akin to a theme park.

Both Cabela’s and Bass – founded in 1961 and 1971 respectively – have also benefitted from their hunting gun businesses, as public demand surges amidst the uncertainty of gun law changes.

The two retailers have a strong foothold across the US, with Cabela’s 80 or so stores generally focussing on the Northwest, while Bass Pro’s approximately 100 stores have a stronger presence in the US Northeast.

The stock was up 15% in pre-market trading to US$62.90.

Story by ProactiveInvestors


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