Rumored for nearly a year, Bass Pro Shops confirmed this morning plans to buy out Sidney, Neb.-based competitor Cabela's Inc. (NYSE: CAB) for $5.5 billion.
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, according to a news release.
Bass Pro founder Johnny 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. The boards of both companies gave the green light for the purchase.
Click here to read Morris' letter to employees about the purchase.
“The story of each of these companies could only have happened in America, made possible by our uniquely American free-enterprise system,” Morris said in the release. “We have enormous admiration for Cabela’s, its founders and outfitters, and its loyal base of customers.”
After closing the deal, 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, according to the release.
Citing people familiar with the matter,
Reuters first reported on Bass Pro’s plans to bid on Cabela’s in November.
In July, Cabela’s reported second-quarter net income of $37.8 million on $929.9 million in revenue. Bass Pro
reportedly produces annual revenue of at least $3 billion, according to Forbes.
Cabela’s shares reached a new 52-week high of $63 this morning on the buyout news. The company’s 52-week low is $33.03.
