Cabela’s Agrees to Buyout by Bass Pro in $5.5 Billion Dealby
Capital One will acquire Cabela’s credit card portfolio
Deal marks victory for activist investor Elliott Associates
Cabela’s Inc. agreed to be bought by Bass Pro Shops in a $5.5 billion deal, handing a victory to the activist investor that had been pushing the outdoor-sports equipment retailer to put itself for sale.
The offer of $65.50 a share in cash represents a 19 percent premium to Cabela’s most recent closing price, the companies said Monday in a statement. Capital One Financial Corp. is acquiring Cabela’s credit card business for an undisclosed amount, according to a separate statement.
The deal, which unites two of America’s largest outdoors retailers, comes almost a year after Elliott Associates began pushing Cabela’s to consider a sale. The chain, which had built a following among hunters and outdoor enthusiasts, came under pressure after revenue and profit growth sputtered.
Cabela’s, founded by brothers Richard and Jim Cabela in 1961, said in October of last year that “significant weakness” in its fall apparel and footwear contributed to a disappointing third quarter. Less than a week later, Elliott disclosed an 11 percent stake and said it would push for a shake-up. The company began a strategic review of its business in December.
In winning the bidding for Cabela’s, Bass Pro beat out competition from private equity bidder Sycamore Partners, people familiar with the matter told Bloomberg.
Sidney, Nebraska-based Cabela’s rose as much as 15 percent to $63 in New York trading. The shares already had gained 18 percent this year through last week, supported by speculation of a sale.
Cabela’s card portfolio is issued by its World’s Foremost Bank subsidiary, which employs 700 people and is based in Lincoln, Nebraska. The retailer had about 1.9 million active accounts in 2015, a 6.8 percent increase from a year earlier, according to its latest annual report. The average balance on cards in the portfolio last year was $2,301, the company said.
Capital One didn’t disclose terms of the acquisition, which includes about $5.2 billion in credit-card receivables. In June, Citigroup Inc. paid American Express Co. about $1 billion for the Costco Wholesale Corp. portfolio, which included about $10.5 billion in credit-card receivables. McLean, Virginia-based Capital One said the deal won’t affect its plans to return capital to shareholders.
Capital One Chief Executive Officer Richard Fairbank has expanded the credit-card consulting firm he founded more than two decades ago into a diversified lender that ranks as the ninth-largest commercial bank by deposits in the U.S. A series of acquisitions -- including retail card portfolios, energy investment banking and health-care lending firms -- have spurred the lender’s growth.
Bass Pro was founded by Johnny Morris in 1972, working out of his father’s liquor store in Springfield, Missouri. Morris is worth about $3.3 billion, according to the Bloomberg Billionaires Index.