Bass Pro Shops has reeled in one of its biggest outdoor retail competitors, announcing plans Monday to acquire publicly traded Cabela's Inc. in a deal valued at about $4.5 billion.
The acquisition remains subject to approval by federal regulators and Cabela's shareholders, but it is expected to close in the first half of 2017 and combine the well-known outdoor equipment and apparel retailers. Privately held Bass Pro Shops was founded in 1972 by Johnny Morris, and Cabela's began operations in Nebraska in 1961 under Dick, Mary and Jim Cabela.
The companies -- which have developed loyal customer bases -- said their "highly complementary business philosophies," product offerings and geographic footprints were driving forces for the deal.
Morris will remain chief executive officer and majority shareholder. He said the company has "every intention of celebrating and growing" the Cabela's brand alongside Bass Pro Shops, which will remain private.
"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 a statement. "We have enormous admiration for Cabela's, its founders and outfitters, and its loyal base of customers."
The acquisition will nearly double the number of retail locations owned by Bass Pro Shops, which has about 20,000 employees in 99 stores across the country. Bass Pro Shops' flagship store is in Springfield, Mo., and the company operates stores in Little Rock, Branson and Memphis.
Cabela's operates 85 stores -- most of which are located in the western part of the country and in Canada -- and employs about 19,000. Cabela's opened a store in Rogers, adjacent to the Pinnacle Hills Promenade, in 2012. It also has regional locations in Kansas City, Kan.; Oklahoma City; and Dallas.
David Faulkner, general manager of Pinnacle Hills Promenade, said the Cabela's store in Rogers has been a "big draw" for the community since opening its doors.
Raymond Burns, president of the Rogers-Lowell Area Chamber of Commerce, said he doesn't know the sales numbers but agreed it has been a "strong store."
"All you really have to do is just count the cars in the parking lot," Burns said. "Just look at the folks that are in Cabela's. Most of the time, people are walking out with something in their hands. They're not just going and looking. They're going and buying."
But Cabela's said late last year that it planned to examine strategic options -- including a potential sale -- after same-store sales continued to lag. There also was pressure from investment firm Elliott Management Corp., which revealed in a U.S. Securities and Exchange Commission filing last October that it held an 11.1 percent stake in the company and intended to push for changes.
Tommy Millner, Cabela's chief executive officer, said in a statement Monday that the decision to sell the company to Bass Pro Shops was made after a "thorough strategic review."
"In addition to providing significant immediate value to our shareholders, this partnership provides a unique platform from which our brand will be extremely well positioned to continue to serve outdoor enthusiasts worldwide for generations to come," Millner said.
It's not known if the deal will lead to any store closures. Jeff O'Neill, marketing manager of the Cabela's store in Rogers, said he anticipates "business as usual."
"From what we've been told, it's going to be an agreement between the two companies, and the Cabela's stores themselves should not feel an effect at all," O'Neill said. "They'll just be owned by a new owner. It will still stay Cabela's."
Bass Pro Shops will pay $65.50 per share in cash for Cabela's, which is a 19 percent premium from Friday's closing price. Cabela's stock closed trading Monday at $63.18 a share, up $8.25.
Bass Pro Shops secured $1.8 billion in financing from Goldman Sachs and $600 million from Pamplona Capital Management for the transaction. Under the terms of the deal, Bass Pro Shops also said it will begin a multiyear partnership with Capital One for a Cabela's co-branded credit card.
The companies said their customer loyalty programs will remain unchanged by the merger.
"I think there's more questions than there are answers, but anything that would make that (Cabela's) store stronger would really be good for Rogers and for Northwest Arkansas," Burns said. "We obviously hope as all of this comes to a conclusion, we'll still be in a good place and have a good store, whatever it is called here, to meet the needs of our area."
Business on 10/04/2016