Bass Pro Shops buying Cabela’s for $5.5 billion; no word yet on how deal might affect jobs in Sidney

Bass Pro Shops buying Cabela’s for $5.5 billion; no word yet on how deal might affect jobs in Sidney
Photo Courtesy: World-Herald News Service

Nebraska-based Cabela’s is headed to Missouri: Bass Pro Shops announced Monday that it would buy the Sidney-based retailer for $5.5 billion.

The purchase brings into question the 2,000 jobs at Cabela’s headquarters in Sidney, Nebraska, a town of about 6,800 people in the southern panhandle. Bass said it “appreciates and understands the deep ties between Cabela’s and the community of Sidney,” but in the deal announcement didn’t commit to anything specific when it comes to jobs there.

“The most obvious place to look for synergies is reducing two headquarters to one,” Don Bilson, an analyst with New York investor research firm Gordon Haskett told The World-Herald earlier this year, using a Wall Street term for combining two parts of a company into a stronger single entity.

Wall Street experts have said it’s likely that Bass Pro would combine office functions — there’s no need for two accounting departments, two marketing departments and so on. They say it’s most likely that Bass Pro would consolidate jobs at its own headquarters in Springfield, Missouri.

Nebraska Gov. Pete Ricketts said the state was prepared to help Cabela’s employees who could lose their jobs.

“My office, the Department of Economic Development and the Department of Labor stand ready to assist area residents and communities to find opportunities,” Ricketts said. “Nebraskans have faced challenges in the past, and we overcome them by working together. We will face these new circumstances by working together as well.”

Still, Bass Pro said in its Monday statement that it “intends to continue to maintain important bases of operations” in Sidney and in Lincoln, where the company has about 500 employees who work for its credit-card division.

That credit-card division, a key profit center for the company, will be run in partnership with Capital One Financial, which also was part of the Bass Pro deal to buy Cabela’s. The announcement said the Bass and Cabela’s customer loyalty programs would remain “unchanged.” It said Capital One intended to continue to operate the credit-card servicing center in Lincoln, though it didn’t detail exactly what positions would remain.

Wall Street analysts have said if a credit card company partnered to buy out the Cabela’s card business, it likely would consolidate operations at its own facilities, especially in the case of a company with as much experience running credit cards as Capital One.

The $5.5 billion deal represents a 19 percent premium over Friday’s closing stock price. It will give Cabela’s shareholders $65.50 per share in cash.

That’s a big prize for activist investor and hedge fund Elliott Management, which last October purchased a large chunk of Cabela’s shares and said it would press for big changes — including the sale of the company or part of it. Elliott paid about $38 a share for its common stock in Cabela’s, Dow Jones said.

Cabela’s stock soared more than 14 percent on Monday morning in the wake of the news. It traded recently around $63 a share on the New York Stock Exchange when the broader stock market was down slightly. Bass Pro is privately owned and thus doesn’t trade on a public exchange.

It’s unclear how the purchase would affect Cabela’s retail stores in markets where both Bass and Cabela’s operate — such as in the Omaha area, where Cabela’s has a La Vista store and Bass has a store in Council Bluffs. The companies didn’t address the issue in its announcement, except to say the companies would “blend seamlessly.”

Cabela’s had steadfastly maintained its silence in the wake of the activist stake. Elliott also hadn’t commented. But investors had been anticipating something big: The retailer’s stock, which had fallen 37 percent in 2015 until the time Elliott announced its stake in October of that year, has gained about 25 percent over the past year — not counting Monday’s gains — as stock buyers have scooped up Cabela’s with the idea that more profits could soon be squeezed out.

Homegrown Cabela’s has a similar origin story to Bass Pro Shops. The Sidney business was founded in 1961 by Dick and Mary Cabela as a home-based catalog business, after Dick Cabela’s effort to sell fishing lures in his father’s furniture store failed. Jim Cabela, Dick’s brother, still serves as company chairman. He couldn’t be reached Sunday.

Bass was started in 1971 by Johnny Morris, who sold fishing tackle out of his father’s liquor store, according to the company.

Bass Pro might have seen Cabela’s dust-up with the activist investor as an opportunity to take out one of its stiffest competitors.

“If Bass Pro buys, the people in Sidney may have reason to wring their hands,” Jim Zipursky, managing director of Omaha of Corporate Finance Associates MidWest, a company that handles mergers and acquisitions, told The World-Herald earlier this year.