Bass Pro purchase of Cabela’s clears its likely final hurdle as Fed approves bank buy

Cabela’s looks to have less than a month left as a stand-alone, Nebraska-based company.

The Federal Reserve cleared the way late Wednesday for a Georgia bank to acquire Cabela’s credit card operation, removing the last hurdle for a Bass Pro Shops takeover of the homegrown outdoors retailer.

Bass Pro is set to buy Cabela’s retail business for $5 billion. The Fed’s approval cut it close: Oct. 3 was the merger deadline, after which all parties could have walked away from the deal or renegotiated the terms.

The deal now looks set to be sealed — possibly within the week.

“We are pleased by the order and are looking forward to closing the deal within the terms of the agreement,” Cabela’s said in a statement to The World-Herald. Bass Pro and Synovus Bank, the Georgia outfit buying Cabela’s credit card business, didn’t immediately respond to a request for comment.

While investors may be relieved, Bass Pro’s takeover could cause more uncertainty in Sidney, Nebraska, a town of about 6,800 where as many as 2,000 people worked for Cabela’s at one time.

Once the deal closes, Springfield, Missouri-based Bass Pro will be in charge, and “what they say goes,” said Lee Dunham, a Creighton University finance professor.

When two competitors combine, there is no need for duplicate operations — like two accounting, legal or human resources departments, for instance. That could mean job cuts on the horizon in Sidney.

Bass Pro has said it will keep significant operations in the Nebraska Panhandle town, but it’s unclear what jobs or how many will remain. Bass Pro Chief Executive Johnny Morris said in October in a recording obtained by The World-Herald that there would be job cuts in Nebraska. Since then, state officials say they have worked to persuade Morris to keep jobs in Nebraska.

For the past two years, Sidney residents say they’ve been worried as the future of the town’s top employer has been hanging in the balance. First, New York hedge fund Elliott Management in October 2015 declared a large stake in Cabela’s and pushed for a sale of the company or parts of it. Then, about a year ago, Bass Pro announced that it would buy the Nebraska outdoors company. Capital One said it would buy World’s Foremost Bank, the Cabela’s-owned bank that operates its credit card and is based in Lincoln.

But an unrelated problem with Capital One soon threatened to stall the deal. Because of the problem with the Office of the Comptroller of the Currency, Capital One said it would not get that federal regulator’s approval by the Oct. 3 merger deadline.

Enter Synovus in April. Under new, renegotiated terms, the Georgia bank will buy World’s Foremost and offload the credit card business to Capital One. Capital One has said it plans to continue to operate the Cabela’s credit card office in Lincoln, though it’s unclear for how long. The office employed about 700 people as recently as two years ago. Capital One didn’t respond to a request for comment.

Investors and industry watchers were unsure how the Fed would act on the bank deal because it essentially allowed the companies to get around another regulator — the OCC.

The Fed made the announcement Wednesday after normal stock-market trading hours. Because Cabela’s World’s Foremost Bank exists primarily to operate its Cabela’s Club credit card, the Fed, which regulates banks, said the sale “would not likely have a significantly adverse effect on competition in any relevant banking market.”

The Fed’s wasn’t the first regulatory approval the companies cleared. The Federal Trade Commission also was investigating the deal for potential competitive issues. The agency gave its approval in July.

With the Fed’s approval, “my guess is this is a done deal,” said Dunham, the Creighton professor. He noted that Amazon’s recent acquisition of Whole Foods received regulatory approval on a Wednesday and closed the following Monday.

“I think this would be something similar,” Dunham said.

Nathan Yates, an analyst covering Cabela’s with Forward View Consulting in Virginia, agreed. Approval of the sale of the bank has been “the real threat to the entire deal,” he said.

In after-hours trading Wednesday, Cabela’s stock jumped sharply, gaining more than 14 percent to trade around $61 a share, a sign that investors’ fears that the deal could fall apart have been quelled. Bass is set to pay $61.50 a share for Cabela’s.

With the uncertainty regarding the deal out of the way, investors are likely happy. In Sidney, meanwhile, the waiting game now begins: What will Bass Pro leave behind as it establishes the merged company’s headquarters in Missouri?

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