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2016 Year in Review No. 1: Bass Pro makes $5.5B offer on rival Cabela's

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SPRINGFIELD, OCT. 3—Bass Pro Shops potentially landed its biggest catch yet in the form of a $5.5 billion acquisition agreement of rival outdoor retailer Sidney, Neb.-based Cabela’s Inc. (NYSE: CAB), offering to take the publicly traded company private in the process.

National speculation began at the close of 2015 when Reuters, citing “people familiar with the matter,” reported Bass Pro Shops was working with an investment bank. Founder Johnny Morris dodged the question on CNBC’s “Squawk Box” later that month. Five months later, Reuters reported Bass Pro Shops had partnered with Goldman Sachs Group Inc.’s private equity arm to make an offer.

Confirmed Oct. 3, the deal – $65.50 per share in cash, a premium of 19.2 percent from Sept. 30 – would bring together Bass Pro’s 99 stores and Tracker Marine centers via White River Marine Group with 85 Cabela’s locations in the United States and Canada. Combined with Cabela’s, the Springfield company would employ roughly 39,000, a 19,000-employee increase from its current workforce.

Bass Pro also plans to enter a multiyear partnership with Capitol One Financial Corp. (NYSE: COF), under which its banking subsidiary would oversee Cabela’s Club, the company’s co-branded credit card. Capitol One would continue to operate the Cabela’s Club servicing center in Lincoln, Neb.

Bass Pro secured $1.8 billion in preferred equity financing – the sale of shares in an enterprise to raise funding – from Goldman Sachs’ merchant banking division and $600 million from Pamplona Capital Management LLP. Debt financing is coming from Bank of America Merrill Lynch, Wells Fargo Securities LLC, UBS Securities LLC and Goldman Sachs.

Board of both companies gave the green light for the purchase and Morris would become CEO and majority shareholder of the privatized company. The deal, expected to close in the first half of 2017, requires regulatory approvals and passage by Cabela’s shareholders.

In late November, regulators asked for more time. In a filing submitted Nov. 29 by Cabela’s with the U.S. Securities and Exchange Commission, officials of both companies said the 30-day statutory waiting period was scheduled to expire, but upon request by the U.S. Department of Justice’s Antitrust Division, U.S. Federal Trade Commission and Canadian Competition Bureau, Bass Pro and Cabela’s  were granted an extension through Dec. 29.

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