OMAHA, Neb. (AP) — Outdoor gear giant Bass Pro is snapping up rival Cabela’s in a $4.5 billion deal announced Monday.
Bass Pro is paying Cabela’s shareholders $65.50 cash per share, a 19 percent premium to Friday’s closing price. The companies valued the deal at $5.5 billion, which includes debt. The deal combines two companies known for their giant destination superstores.
It also creates uncertainty about jobs in Cabela’s home state of Nebraska. The combined companies plan to keep some operations in Sidney and Lincoln, Nebraska, but it’s not immediately clear how many jobs might be lost.
Cabela’s employs about 2,000 people in the western Nebraska town of Sidney, which has about 7,000 residents. State Sen. Ken Schilz, who represents the area, said the deal is concerning because of the duplication between the two companies’ headquarters that will be eliminated.
“We’ll just have to wait and see what Bass Pro does. I’m sure most folks in Sidney are pretty nervous this morning,” Schilz said.
Activist investment firm Elliott Management began pushing for significant changes at Cabela’s last fall. Elliott owns 7.4 percent of Cabela’s shares and holds options to buy another 3.8 percent.
A sale of the Cabela’s has been a distinct possibility ever since the company announced a review of its strategic options last December, but many in Sidney weren’t ready to believe it could happen.
“We’re just trying to absorb it right now,” said Denise Wilkinson, president of the Cheyenne County Chamber of Commerce. “We just never knew what would happen.”
Bass Pro founder and CEO Johnny Morris said he hopes to continue growing the Cabela’s brand alongside his privately-held Springfield, Missouri, based chain.
“The story of each of these companies could only have happened in America, made possible by our uniquely American free enterprise system,” Morris said. “We have enormous admiration for Cabela’s, its founders and outfitters, and its loyal base of customers.”
Capital One will take over running Cabela’s credit card unit as part of the deal, which is backed by $1.8 billion in financing from Goldman Sachs and another $600 million from private equity fund Pamplona Capital.
Cabela’s was founded in 1961 when Dick Cabela started selling fishing flies through the mail from his kitchen table with his wife, Mary, and brother, Jim. It now has 85 retail stores primarily in the western U.S. and Canada.
Bass Pro got its start in 1971 when Morris began selling high-quality fishing tackle in his dad’s liquor store in Springfield, Missouri.
Morris developed a following in the Ozarks region — its lakes and rich streams a haven for anglers — created the Bass Pro Shop Catalog in 1974 and opened the first of his now 99 stores in Springfield seven years later. Bass Pro’s stores are mostly in the eastern United States and Canada.
Morris also introduced the Bass Tracker fishing boat in 1978 that was designed specifically for fishermen. That led to the creation of the White River Marine Group.
Nebraska politicians are encouraging Bass Pro to maintain significant operations in the state after the deal closes sometime in the first half of next year.
“I know from personal experience that when you hire Nebraskans you get individuals who are well-educated, have a great work-ethic, and will make your company succeed,” said Gov. Pete Ricketts, the former TD Ameritrade executive.
U.S. Rep. Adrian Smith said Cabela’s has long been “a cornerstone of western Nebraska’s economy.”
Cabela’s shares climbed $8.19, or 14.9 percent, to $63.12 in afternoon trading Monday.