The proposed $5 billion merger between Cabela’s and Bass Pro Shops cleared one potential obstacle in recent days as the rivals’ close competition on price and promotional strategies did not trigger major antitrust concern with staff at the Federal Trade Commission, according to a report from investigative news and legal analysis company Capitol Forum.
The determination clears the path for FTC staff to prepare their recommendation to the commissioners on whether the deal should be allowed, according to the report.
The similarities and overlap of the two outdoor retailers make a merger both rational and a target of careful scrutiny from regulators, Scott Wagner, an antitrust expert and partner in law firm Bilzin Sumberg’s litigation group, told Retail Dive last year.
Cabela's and Bass Pro Shops have a lot in common. Both were founded in roughly the same era and in the same area of the country, with a similar number of stores sharing a destination-like shopping approach. “This speaks to one of the greater trends in the industry, in retail but in sporting goods in particular, to create a customer experience that makes it worthwhile to go to a store," IBISWorld analyst Rory Masterson told Retail Dive last year.
There’s also considerable overlap in their customer bases: Bass Pro noted that 45% of its customers also frequent Cabela’s. “They really are the best possible example of direct competitors," Wagner told Retail Dive. "And that always raises antitrust concerns, especially in a market of this size and a transaction of this size.”
The tie-up has faced other challenges. In December, each received an FTC request for additional information and documents (commonly known as a “second request”), which launched a more involved process and a delay in the proceedings. The attendant sale of Cabela's credit card business also threatened to the plan, until subsidiaries of Synovus Financial Corp. and Capital One Financial Corp. in April devised an agreement to solve that.
At that time, the retailers also amended their merger agreement, lowering the price tag to smooth approval: Bass Pro Shops will now acquire Cabela’s for $61.50 per share in cash (down from the previously announced price of $65.50), an aggregate transaction value of $5 billion.