Cabela's-Bass Pro merger gets FTC blessing

Dive Brief:

The Federal Trade Commission on Monday notified Cabela’s that its proposed merger with rival Bass Pro Shops can proceed, according to a filing with the Securities and Exchange Commission.
The deal must yet garner approval from Cabela’s shareholders, which the outdoor retailer is seeking at a special meeting scheduled for July 11.
The similarities of the two retailers makes the merger at once 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 — and that's exactly what the proposal has received since it was announced last October.

Dive Insight:

This merger has faced a host of challenges. In December, each company received an FTC request for additional information and documents (commonly known as a “second request”), which launched a more involved process and a delay. The attendant sale of Cabela's credit card business also threatened the plan, until subsidiaries of Synovus Financial and Capital One Financial 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.

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 materials sent to shareholders earlier this year.

Cabela's and Bass Pro Shops have a lot in common. Both were founded in roughly the same time frame 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.”