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Bass Pro, Cabela’s pass FTC merger review

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Cabela’s Inc. (NYSE: CAB) today released a Federal Trade Commission filing stating the FTC closed its investigation of Bass Pro Group LLC's planned acquisition of the rival outdoor retailer. 

Businesses in large mergers must file with the FTC and wait for a government review, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. After several extensions and seven months, during which the FTC looked at data concerning market competition, the FTC closed its investigation, legally allowing the two outdoor retailers to continue with plans to merge.

The merger would nearly double Bass Pro Shops. It currently has 99 stores, and Cabela’s has 85 locations according to a news release, compared to its closest competitor Gander Mountain which lists 150 stores on its website.

By revenue comparison, publicly traded Cabela’s reported 2016 revenue of $4.13 billion, and privately held Bass Pro is estimated to generate roughly $4.5 billion annually, according to Forbes. When Gander Mountain was part of the Nasdaq market, it reported $498.4 million in 2004 revenue but has since privatized and filed bankruptcy earlier this year. In May, Camping World Holdings Inc. bought Gander Mountain and the new owners announced plans to close roughly 30 stores in 11 states.

The FTC has not yet released a comment on its website.

Clearing the FTC's scrutiny of antitrust laws is a major hurdle cleared for the $5 billion proposed transaction, but it's still subject to a vote of Cabela’s stockholders at a July 11 meeting.

The merger, which was proposed Oct. 3, 2016, would make Bass Pro founder Johnny Morris CEO and majority shareholder of the new private entity, according to a news release.  

Bass Pro, backed by Goldman Sachs Group Inc. and Pamplona Capital Management LLP, would buy the Sidney, Nebraska-based competitor’s 68.9 million outstanding shares for $61.50 each. That’s after the price was lowered from $65.50 on April 17.

Cabela's stock opened today at $ 60.10, with a 52-week price high of $63.60, according to New York Stock Exchange’s website. The stock had dropped as low as $45 per share in February. 

There is tension between Cabela's and its shareholders – many of whom are employees. Four class-action lawsuits have been filed against Cabela’s by shareholders who claim the company’s communications in regard to the merger have been misleading and incomplete.

Cabela’s responded in a previous FTC filing stating, “The company believes that the claims asserted in the merger litigation are without merit and intends to defend against the merger litigation vigorously.”

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