Updated 9/30/2017

DETAILS OF THE CABELA’S AND BASS PRO MERGER

Bass Pro Shops announced on October 13th, 2016 that it has reached an agreement to purchase Cabela’s for $5.5 billion. After clearing several substantial hurdles, the deal was closed on September 25th, 2017. The two stores announced that they had joined forces to become the “best of the best”. Many hunters and anglers are concerned about the potential implications that the deal will have on the outdoor industry. You might have a favorite store, or you don’t like the idea of a single mega-giant in the outdoor industry. I am going to attempt to address many of these concerns and answer some questions this deal has created. While I list deals from both companies, I don’t have any inside connections, resources, or ulterior motives involving the deal.

COMPANY HISTORIES

From the Kitchen Table to the NYSE

Cabela’s was founded over 55 years ago, at the Sidney, NE home of Dick and Mary Cabela. In 1961, Dick ran an advertisement for fishing flies in national sporting magazines and the eventual outdoors behemoth was in business. The company debuted on the NYSE on June 25th, 2004. Today, Cabela’s has 85 specialty stores and has over 19,000 employees.

Liquor, Boats, and Vacation Lodges

Johnny Morris started Bass Pro Shops in the back of his father’s Springfield, Mo liquor store in 1972. His first mail-order catalog was shipped in 1974. Bass Tracker, the first boat, motor, trailer package marketed specifically to fisherman was created in 1978. There are now 99 retail locations and Tracker Marine centers nationwide, with over 20,000 employees. Bass Pro Shops also owns and operates Big Cedar Lodge, near Branson, MO, hosting over 1 million visitors per year.

THE DEAL

Why Would the World’s Foremost Outfitter Sell to its Biggest Rival?

In short, if you can’t beat them, join them. Cabela’s was losing ground to smaller, more agile competitors and online retailers. Sales at existing Cabela’s locations were decreasing, which is a key indicator of the health of retail companies. In December 2015, Cabela’s announced that it would “weigh strategic alternatives to their current operations”, basically putting itself up for sale. The announcement was made in reaction to a hedge fund management company purchasing 11% of the outstanding shares. The fund managers then declared Cabela’s to be undervalued due to its poor performance in recent years. While sales have improved slightly since the announcement, the toothpaste could not be put back into the tube.

What’s the Going Rate for an Outdoor Retail Giant?

Cabela’s is a publicly traded company with 68.47 million shares outstanding. Bass Pro Shops has offered $65.50 in cash, per share, and the Cabela’s board has accepted. That price represents a 19% premium over the price per share before the announcement. The cash total for the deal will be roughly 4.5 million. I’ve done a little poking around, and I’m not sure where the other billion dollars from the 5.5 billion announced value come from. It’s possible that there are private equity shares or that Bass Pro is acquiring Cabela’s debt as well.

 

FREQUENTLY ASKED QUESTIONS

What is the new name going to be?

Both stores will continue to operate under their existing names and branding. The wording used is very tentative and I would expect once the dust settles, a single name will be chosen. I would expect the name to focus on outdoors, rather than fishing or outfitting.

Are Cabela’s Stores Closing?

According to the Dallas Business Journal, “There are currently no plans to rebrand Cabela’s as Bass Pro shops, and Bass Pro said the merger is about growth opportunities, not synergies.” Dallas is home to two Cabela’s and Bass Pro locations. Kansas City is also home to both retailers. Otherwise, Cabela’s locations are primarily located in the western US and Canada, and Bass Pro Shops are located primarily in the eastern US.

Before the sale, Cabela’s had announced a strategy to drastically increase the number of retail locations with smaller, less extravagant stores. Bass Pro seems to have been implementing a similar strategy. The effectiveness of giant, tourist driven retail locations, with premium real-estate costs, are diluted when there are nearly 100 locations. I believe Bass Pro will continue the strategy of adding smaller, lower cost locations throughout the US and Canada.

What’s going to happen with the Cabela’s CLUB Visa and Bass Pro Outdoor Rewards Mastercard rewards programs?

As part of the deal, Bass Pro Shops has signed a 10-year agreement with Capital One to manage and operate the Cabela’s CLUB Visa program. The Cabela’s CLUB is highly profitable, and has desirable members, so Bass Pro will look to leverage its success. Capital One will continue operations at the Lincoln, NE Cabela’s CLUB service center. Rewards programs will also remain the same for the time being. Bonus rewards will only apply to the store brand on the card. I think it’s safe to say that at some point the programs will be combined, but Bass Pro will likely be careful not to alienate the customer base it just paid a premium to acquire. Since the two programs are operated by rival credit card companies, combining them will involve contract negotiations and buyouts if it occurs before the current 10-year contract expires.

Rewards points will remain intact for both stores, but are not transferable at this time.

Can I Use My Gift Card at Both Stores?

Yes! Right now, the card must be exchanged at the customer service counter, online, or by phone before making your purchases. The transition team is looking for a way to improve this process. Personally, I think this is the greatest benefit of the merger at this juncture.

Can I use Ship-to-Store for online purchases from the alternate store?

At this time, they are not able to offer this service, but they have stated they plan to offer this in the future. This would be a great benefit making free shipping to a local store available without discount codes.

What will happen to the Cabela’s Products Lifetime Warranties?

Bass Pro Shops will continue to honor the Cabela’s warranties.

Are Prices Going Up?

The September 25th, 2017 press release states that the merger will provide more buying power. The FAQs state that they will begin the process of ensuring the prices are consistent. Obviously there aren’t going to be any announcements about future pricing strategy. My first reaction was, “Less competition is bad, and prices will go up.” In reality though, both stores list most of their products at MSRP, so they really can’t go any higher. Cabela’s typically offers better online sales, so that will be something to keep an eye on. Internet sales for Cabela’s have been improving, so hopefully that is something Bass Pro will look to continue after the merger. Another area to keep an eye on, is the quality of the privately labeled gear. Cabela’s is known for making quality outfitter gear and that is an area where cost-cutting could occur. The western market demands, and is willing to pay a premium for, high-quality hunting and fishing gear. Bass Pro is aware of the market, and as I stated earlier, will not want to alienate their new customer base.

CONCLUSION

I will be keeping an ear to the ground regarding the merger, and updating this post accordingly. If you have any additional thoughts or questions, post them in the comment section below.

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