Cabela’s has agreed to a purchase from Bass Pro Shops, who will pay $4.5 billion and make the combined company private. This was a joint announcement by both businesses on Monday.
This acquisition is going unite two businesses that are both outdoor supply superstores. Their target consumer demographics include those who camp, fish, hunt, or enjoy other wilderness activities. There was not news about what impact the acquisition might have in terms of closing stores. However, both companies did say that Bass Pro Shops would not only maintain the Cabela’s brand, but also “celebrate” as well as “grow” it.
The announced deal arrives just short of a year after Elliot Management, a hedge fund, advocated that Cabela’s open itself for a potential sale. Elliot Management had analyzed the Sidney, Nebraska-based company thoroughly and decided that the retail chain was undervalued. Its advice was either reorganization or sale.
Bass Pro Shops is privately held, and intends to pay Cabela’s $65.50 in cash for each share. That’s a 19.2-percent premium over the closing price of the previous Friday. As of the last corporate filing disclosure, Cabela’s had counted 68,909,403 outstanding shares. On the heels of the Monday news, Cabela’s shares leaped up 15 percent.
Cabela’s has typically had larger-format destination retail locations, but it has suffered at the hands of online competition as well as other retail stores, all of whom have proven smaller and nimbler. In the first six months of 2016, stores that had been open for a minimum of a year saw their sales fall 1.3 percent.
The notable drop-offs were foot traffic, as consumers were buying fewer items of footwear and clothing. As a result, the total number of transactions fell 8.1 percent, though the damage of this was almost offset by stronger hunting sales increasing the average transaction revenue by 8.2 percent.
The CEO of Bass Pro Shops, Johnny Morris, founded his company back in 1972 in Springfield Missouri, but with this deal is registering an astounding expansion of his business. The new entity of the combined businesses will be majority-owned and led by the billionaire.
Before the deal finalizes, Bass Pro Shops employs roughly 20,000 people across 99 stores, whereas Cabela’s had hired approximately 19,700 individuals across 85 retail locations.