Cabela's Incorporated’s CAB stock price continues to climb Tuesday, up over 7%, after its once-questioned buyout by fellow outdoor retail giant Bass Pro Shops cleared a pivotal hurdle.
Cabela's announced on Monday that Bass Pro Shops will acquire the hunting mega-store company for $5 billion, or approximately $61.50 per share in cash, which marks a $500 million price cut from the initial October buyout terms. The new deal comes after regulatory red tape held up the purchase of Cabela’s banking assets.
The Sidney, Nebraska-based company owns its own bank, The World’s Foremost Bank, in order to issue Cabela’s branded credit cards. Cabela’s bank still runs on a relatively antiquated system of financing customer’s purchases by issuing CDs.
According to the new statement, Synovus Financial Corp. SNV will now purchase Cabela's banking assets. Synovus will buy the bank’s $1.2 billion in deposits, and then Capital One Financial Corp. COF will buy Cabela’s credit card portfolio. Capital One originally planned to buy both of Cabela’s financial assets, but regulatory issues held up the deal until Synovus stepped in.
Privately owned Bass Pro Shops owns over 90 giant retail locations in North America that focus on fishing, boating, and camping, while Cabela’s runs roughly 85 stores in the US and Canada in a similar space, but with a primary focus on hunting. Bass Pro Shops does not currently plan to change much about how Cabela’s does business.
Bass Pro Shops and Cabela’s hope the deal better positions both outdoor retail brands for the future, as online behemoths such as Amazon.com Inc. (AMZN) invade more and more retail sectors, even niche markets like fishing and hunting.
“We’re excited to announce this agreement, which allows us to look ahead with greater certainty toward the completion of our merger with Bass Pro Shops and offers a positive step forward for all parties,” Cabela’s CEO Tommy Millner said in a press release. “We look forward to completing these transactions for the benefit of our shareholders, Outfitters and outdoor enthusiasts.”
Cabela's stock price was up 7.28% to $57.60 per share in early afternoon trading on Tuesday.
The deal is expected to close in the third quarter. However, according to Cabela’s statement, it still needs approval from the company’s shareholders, and it will need a few more regulatory approvals as well.
Cabela’s is scheduled to release its first quarter financial results on May 4, but the company will not hold a call with investors or analysts until the acquisition is fully complete.
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