Bass Pro Shops’ $5.5 billion purchase means Cabela’s fate is set — but Sidney’s isn’t

Bass Pro Shops’ $5.5 billion purchase means Cabela’s fate is set — but Sidney’s isn’t
Photo Courtesy: World-Herald News Service

SIDNEY, Neb. — The place on whose shoulders Cabela’s was built will most likely soon relinquish the company’s headquarters to Missouri.

Around here, it stings, say people in this company town of 6,800 — around 2,000 of whom work for the homegrown outdoors retailer, now on Fortune Magazine’s list of the U.S.’s largest companies.

But worse than the sting is now the worry: What will happen to Cabela’s employees — and to the town itself — now that competitor Bass Pro Shops announced a $5.5 billion deal to buy the World’s Foremost Outfitter?

“I’m feeling like there’s been a death in the family,” said Jenifer Wamsley, a former Cabela’s worker who opened a convenience store here called “The Post” three years ago.

“Cabela’s has been what’s kept this town afloat and allowed it to thrive,” she said. “If Bass Pro doesn’t stick around, it’s going to be devastating.”

Bass said it “appreciates and understands the deep ties between Cabela’s and the community of Sidney,” but in the deal announcement Monday didn’t commit to anything specific when it comes to the jobs in this town about six hours west of Omaha.

“It’s not going to help people in Sidney or Nebraska. There’s no way around that,” said Anthony Hendrickson, dean of Creighton University’s Heider College of Business.

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

The deal is expected to close in the first part of next year, which is when Sidney and Cabela’s employees in other cities across the state should learn their fates.

Erik Gordon, a professor at the Ross School of Business at the University of Michigan who focuses partly on mergers and acquisitions, said typically the acquiring company — in this case, Bass Pro — keeps its headquarters and closes the acquired company’s.

He said Nebraska-based Cabela’s employees could be offered jobs in Missouri, and sometimes employees are offered relocation help. But acquisitions of this type are about saving money, he said — cutting overlapping departments into one.

“That means job losses,” he said, “and many of them will be at the company that is bought.”

Wendall Gaston, the vice mayor of Sidney and a pharmacist here, said the news doesn’t do much to change the uncertainty that had been hanging over Sidney for the year or so since Cabela’s became the target of an activist investor that said it would press for changes, the culmination of which is Monday’s sale.

As he walked into a junior high football game Monday night in Sidney, a 45-year-old father of one of the players said that people are kidding themselves if they don’t see job cuts ahead.

The man — who wore a Cabela’s camouflage sweatshirt — said he’d worked for Cabela’s for 15 years before the company this spring decided to outsource its creative department, the people who develop the ads, the catalog, the websites and the videos.

A Wisconsin-based firm, Quad/Graphics, rehired about 80 of the 150 Cabela’s workers who lost their jobs and located a branch office in Sidney that still works with Cabela’s.

Still, “if anyone thinks their job is safe, they’re delusional,” said the man, who declined to give his name. “There’s no need for two HR departments … the redundancies are going to go away.”

“It’s not going to be pretty around here,” he said.

Just about everyone here either works for the company or knows someone who does. A city water tower, painted the dark-green color of the roofs of Cabela’s buildings, looms over the company’s huge retail store and even larger headquarters building inscribed with the words “Cabela’s World Headquarters.”

No one answered the phone at the home of company Chairman Jim Cabela in Sidney on Monday. A message left on the home telephone of company co-founder Mary Cabela in Sidney wasn’t returned.

Sidney Mayor Mark Nienhueser appealed to sentiment in a statement: “The city of Sidney and Cabela’s have had a shared history of growth and prosperity since 1969 when Dick and Jim Cabela moved their company from Chappell (Nebraska) to Sidney, and we are hopeful that Cabela’s will continue significant operations in its hometown,” he said.

Vice Mayor Gaston said city officials don’t know anything the public doesn’t. But Sidney has been cutting spending this year in anticipation of an economic hit, he said. Sidney postponed buying new fire equipment, didn’t buy any extra vehicles and decided not to build a new street department building.

Gov. Pete Ricketts said the state was prepared to help Cabela’s employees who could lose their jobs. Meanwhile, Ricketts said his office would “look forward to working with Bass Pro Shops to keep as many jobs in Sidney as possible.”

Ricketts was set to meet Sidney-area elected officials and other leaders today for a discussion of possible next steps.

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. A spokeswoman wouldn’t elaborate.

Wendy Birdsall, the head of the Lincoln Chamber of Commerce, said she was “encouraged” by Cabela’s announcement. “It could have been much different, much less favorable to Nebraska,” she said.

Capital One and Cabela’s said they would maintain the World’s Foremost Bank operations in Lincoln, but it’s not clear for how long or how employees there might eventually be affected, if at all.

A document filed by Cabela’s with the federal government addressed to employees doesn’t answer the question of whether workers will lose their jobs at the Lincoln facility.

“While it is difficult to predict any outcome at this time, we are committed to keeping you informed throughout this process as more decisions are made,” the document says.

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

Bass Pro’s stated plan to maintain some operations in Sidney brings a measure of relief, said Gaston, the vice mayor. But people still wonder what those operations will be and how the relationship will change between the town and its best-known corporate citizen.

Monday’s $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. Elliott told The World-Herald on Monday that it had no comment on the deal.

Cabela’s stock soared more than 15 percent by the close of trade Monday, fetching $63.18 a share on the New York Stock Exchange.

“The deal is good for shareholders,” said Gordon, the University of Michigan professor. “The combined company will be stronger.” Cabela’s had for many quarters struggled with flagging sales.

Bass Pro is privately owned and thus doesn’t trade on a public exchange. The new, combined company would remain private.

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 Council Bluffs store. The company didn’t address the issue in its announcement, except to say the companies would “blend seamlessly.”

It’s also unclear whether both store nameplates would continue to exist, or, for instance, whether Cabela’s would be simply a brand of items sold within Bass Pro retail shops.

Bass Pro Chief Executive Johnny Morris said only that “Bass Pro Shops has every intention of celebrating and growing the Cabela’s brand.”

“Our journey has just begun!” Morris hand-wrote at the bottom of a statement issued by the company to Bass Pro employees Monday.

For Sidney, the journey with Cabela’s could soon be at an end.