Cabela's stock rises on report of sale to Bass Pro Shops, Goldman Sachs

Dive Brief:

Cabela’s is close to being sold to rival Bass Pro Shops and Goldman Sachs, the New York Post reports, with a source telling the paper: “Bass is the only buyer around it.” Neither Cabela’s nor Bass Pro Shops have commented on the rumors.
Private equity firms Apax Partners and TPG Capital have dropped their interest in the sale, which is expected to close within days, the Post said.
Cabela’s shares rose 2.7% to $54.08 on the news, a 14-month high, according to Investors Business Daily.

Dive Insight:

For months, privately held Bass Pro Shops—an outdoor retailer quite similar to Cabela’s—has been rumored to be looking into acquiring its rival, working with Goldman Sachs Group’s private equity unit to reach a deal.

Cabela's investor Elliott Management last year disclosed an 11% stake in the company and has been urging a sale or other ways to unlock value in the beleaguered retailer, including a real estate sale or spin-off of its credit-card business, which delivers some 30% of its total sales. The Post reports that another buyer is interested in this credit-card business and that deal should close about the same time.

The fact that Cabela’s sells guns emerged as a controversial aspect of its business in light of increasing mass shootings in the U.S., though, with some private equity firms balking at gun-related investments. And the founding Cabela family still holds a 24% stake in the company, widely seen as another possible obstacle in any plans for a sale.

But such road blocks have apparently been overcome, with a putative deal reportedly just days away. Bass Pro Shops' work with Goldman would give it the financing it needs to for the acquisition of Cabela's and the efficiencies and synergies that Elliott Management has been after.

The news comes as Cabela's announced plans to open two new stores in Albuquerque, NM, and in Chesterfield Township, MI, according to a press release. Both Cabela's and Bass Pro Shops feature elaborate displays in their stores, with Cabela's Albuquerque store including a 360-degree mountain and wildlife exhibit and an indoor archery range.

“We are thrilled to announce Albuquerque as our first location in New Mexico,” Cabela’s CEO Tommy Millner said in a statement. “We’ve had a strong customer base through our online and catalog businesses in this area for many years. Building a store here will allow us to serve those customers better, while also introducing thousands of additional outdoor enthusiasts to the Cabela’s brand and experience.”

Soon, perhaps, make that “Bass Pro Shops.”