Cabela’s co-founder and chairman Jim Cabela attempted to ensure that the outdoor retailer’s headquarters would remain in Sidney, NE, in case of a merger, according to documents filed with the Securities and Exchange Commission last week.
Cabela's was entertaining a sale even before hedge fund Elliott Capital Management disclosed its 11.1% stake in November 2015 and began pushing the retailer to pursue "strategic alternatives,” including a sale, according to the materials sent to shareholders.
Last October, the company announced it would sell itself to rival Bass Pro Shops for $65.50 per share in cash, or approximately $5.5 billion, without any guarantees about the fate of its headquarters. The agreement has since been revised downward to $61.50 per share in cash and an aggregate transaction value of $5 billion as it’s faced ongoing antitrust scrutiny at the Federal Trade Commission.
In addition to lowering its deal price, Cabela’s last month dispensed with another thorny issue holding up the sale: the attendant sale of its wholly owned bank subsidiary, World’s Foremost Bank. Cabela's in April entered into agreements with subsidiaries of Synovus Financial Corp. and Capital One Financial Corp. to sell those assets and liabilities.
Capital One’s struggle to obtain regulatory approval for Cabela’s in-house credit-card issuer had thrown the whole merger plan into doubt earlier this year, but the deal with Synovus, which first emerged last month, could salvage it.
“We’re excited to announce this agreement, which allows us to look ahead with greater certainty toward the completion of our merger with Bass Pro Shops and offers a positive step forward for all parties,” Cabela’s CEO Tommy Millner said in a statement last month. “We look forward to completing these transactions for the benefit of our shareholders, outfitters and outdoor enthusiasts.”
But it’s not a done deal: In December, Cabela's and Bass Pro Shops each received a request for additional information and documents (commonly known as a “second request”) from the FTC in connection with their proposed merger, according to a filing with the Securities and Exchange Commission. The FTC request launched a more involved process that could continue to delay the merger for several months.
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. “It’s about bringing customers in to brick-and-mortar stores. It invites them to consider buying extra things that they might not have been considering going in."
There’s also considerable overlap in their customer bases: Bass Pro noted that 45% of its customers also frequent Cabela’s. The similarities and overlap make a merger both rational and a target of careful scrutiny from competition enforcers, according to Scott Wagner, an antitrust expert and partner in law firm Bilzin Sumberg’s litigation group. Clearly, close scrutiny is ongoing. “[Bass Pro Shops and Cabela's] really are the best possible example of direct competitors," Wagner told Retail Dive last year. "And that always raises antitrust concerns, especially in a market of this size and a transaction of this size.”