Coverage: Bass Pro Shops, banks to buy rival Cabela’s

Bass Pro Shops, Goldman Sachs Group Inc.’s private equity arm and Capital One Financial Corp. are in the lead to acquire U.S. outdoor gear retailer Cabela’s Inc. for more than $4 billion.

Greg Roumeliotis of Reuters has the day’s news:

The deal would unite two of the country’s largest hunting and fishing retailers and likely face antitrust scrutiny. It would come close to a year after Cabela’s said it would explore strategic alternatives, including a potential sale, after coming under pressure from activist fund Elliott Management Corp.

The exact price the Bass Pros consortium was offering for Cabela’s could not be immediately learned. But the deal is set to value Cabela’s well in excess of $4 billion, according to the sources.

The Bass Pro consortium has so far prevailed over a rival bid from private equity firm Sycamore Partners, which had teamed up with U.S. credit card company Synchrony Financial (SYF.N) to make an offer, the people said. While it is still possible that the outcome changes, a deal could be announced as early as this week, the sources said.

The sources asked not to be identified because the deliberations are confidential. Cabela’s and Goldman Sachs declined to comment, while Capital One and Bass Pro did not immediately respond to requests for comment.

Ed Hammond of Bloomberg News notes that Cabela’s has been under pressure from an activist shareholder:

Cabela’s, which has been under pressure from activist investor Elliott Associates to pursue a sale, began a strategic review of its businesses in December. Revenue and profit growth had sputtered as a surge in gun sales abated, and the company 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 shakeup.

Shares in the Sidney, Nebraska-based company have surged 18 percent this year after dropping 30 percent in the two years through 2015. The stock climbed 2.6 percent to $54.93 in New York on Friday.

Neither Bass Pro nor Cabela’s representatives were available for comment outside of regular business hours.

Cabela’s was founded by brothers Richard and Jim Cabela in 1961. Richard died last year, and Jim, now in his mid-70s, still serves as chairman.

Bass Pro was founded by Johnny Morris in 1971, working out of his father’s liquor store in Springfield, Missouri, according to the company’s website. Morris is worth about $3.3 billion, according to the Bloomberg Billionaires Index.

Josh Kosman of the New York Post writes that Cabela’s also has a buyer for its credit card business:

Meanwhile, Cabela’s has found a separate buyer for its credit card business, which is responsible for about 30 percent of total sales. The chain expects to sign the deal at the same time it signs an agreement with Bass Pro and Goldman to sell the retail operation.

Cabela’s and Bass Pro are about the same size and together will become the dominant seller of outdoor and hunting gear. Presently, Cabela’s generates about 40 percent of its sales from hunting equipment.

Since October, Cabela’s has been under fire from activist investor Paul Singer’s Elliott Management hedge fund, which bought an 11 percent stake and pressed management to consider options for boosting the stock price, including a sale.

Cabela’s leadership has resisted a sale to Bass Pro in years past but now is more open to the idea.