Bass Pro Shops to acquire Cabela’s

Bass Pro Shops will acquire competitor Cabela’s Incorporated, the two companies announced Monday.

Bass Pro Shops will acquire Cabela’s for $65.50 per share in cash, representing an aggregate transaction value of approximately $5.5 billion.

In addition, upon closing Bass Pro Shops will commence a multi-year partnership agreement with Capital One, National Association, a wholly-owned national banking subsidiary of Capital One Financial Corporation (NYSE: COF), under which Capital One will originate and service the Cabela’s CLUB, Cabela’s co-branded credit card.

Cabela's was founded in 1961 by Dick, Mary and Jim Cabela, and today has more than 19,000 “outfitters” operating 85 specialty retail stores, primarily in the western U.S. and Canada. Bass Pro Shops, founded in 1972 by Johnny Morris has 99 stores and Tracker Marine Centers located primarily in the eastern part of the U.S. and Canada. Morris started the business with eight square feet of space in the back of his father's liquor store in Springfield, Mo., the company’s sole location for the first 13 years of business. Bass Pro Shops, which employs approximately 20,000 team members, has been named by Forbes as one of "America's Best Employers." The company also operates Big Cedar Lodge, America’s Premier Wilderness Resort, welcoming more than one million guests annually to Missouri’s Ozark Mountains.

In 1978, Morris introduced Tracker. Now, as White River Marine Group, it includes multiple brands including Tracker Boats, Sun Tracker, Nitro, Tahoe, Regency, Mako, Ranger, Triton and Stratos.

"Today's announcement marks an exceptional opportunity to bring together three special companies with an abiding love for the outdoors and a passion for serving sportsmen and sportswomen," said Johnny Morris, founder and CEO of Bass Pro Shops. "The story of each of these companies could only have happened in America, made possible by our uniquely American free enterprise system. We have enormous admiration for Cabela’s, its founders and outfitters, and its loyal base of customers. We look forward to continuing to celebrate and grow the Cabela’s brand alongside Bass Pro Shops and White River as one unified outdoor family.”

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"Cabela’s is pleased to have found the ideal partner in Bass Pro Shops," said Tommy Millner, Cabela’s CEO. "Having undertaken a thorough strategic review, during which we assessed a wide variety of options to maximize value, the Board unanimously concluded that this combination with Bass Pro Shops is the best path forward for Cabela’s, its shareholders, outfitters and customers. 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."

"This opportunity would not be possible without the contributions of the many wonderful Cabela’s, Bass Pro Shops and White River team members,” Morris said. “All three companies are blessed to have been built by the extraordinary efforts of many tremendously talented, dedicated people throughout our respective histories, and we're thrilled to consider what the combined team can achieve going forward.”

Bass Pro Shops said intends to continue to maintain "important bases of operations" at Cabela's headquarters in Sidney and Lincoln, Neb.

Morris will continue as CEO and majority shareholder of the new entity, which will remain a private company.

Transaction details

The transaction provides Cabela’s shareholders with a premium of 19.2 percent to Cabela’s closing share price on Sep. 30, 2016, the day prior to announcement of the transaction, 39.7 percent to the closing share price on Dec. 1, 2015, the day before Cabela’s announced its exploration of strategic alternatives and 57.1 percent to the 90-day volume weighted trading average prior to Dec. 1, 2015. Immediately prior to closing, Capital One will acquire certain assets and assume certain liabilities of Cabela’s World’s Foremost Bank. The cash proceeds from this transaction will remain with Cabela’s until it is acquired by Bass Pro Shops.

The transaction agreements were unanimously approved by Cabela’s Board of Directors following a comprehensive review of strategic and financial alternatives.

The transaction, which is expected to close in the first half of 2017, will be completed through a cash merger and is subject to approval by Cabela’s shareholders, as well as regulatory approvals and other customary closing conditions.

J.P. Morgan served as exclusive financial advisor to Bass Pro Shops and Latham & Watkins served as Bass Pro Shops’ legal counsel, with expert assistance from O’Melveny & Myers. Goldman, Sachs & Co. served as financial advisor to The Merchant Banking Division of Goldman Sachs and Davis Polk & Wardwell LLP served as legal advisor. Goldman, Sachs & Co. also served as advisor to Bass Pro Shops on the bank transaction, and Morrison & Foerster served as legal counsel. BofA Merrill Lynch, Wells Fargo Securities LLC, Citigroup Global Markets Inc., RBC Capital Markets, UBS Securities LLC, and Goldman Sachs are providing debt financing to support the transaction.

Guggenheim Securities served as exclusive financial advisor to Cabela’s and Sidley Austin LLP and Koley Jessen P.C., L.L.O. served as Cabela’s legal counsel.

The Kessler Group and Credit Suisse acted as financial advisers to Capital One and Wachtell, Lipton, Rosen & Katz and Chapman and Cutler acted as legal advisers.

 

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