Bass Pro Shops has agreed to acquire Cabela’s for $5.5 billion, combining two of the nation’s largest outdoor gear retailers and almost doubling Bass Pro’s store count.
Both companies sell hunting and fishing equipment, with Bass Pro’s 99 stores mainly found in the eastern part of the U.S. and Canada, while Cabela’s 85 locations are concentrated in the western part of North America.
Cabela’s had announced on Dec. 1 that it would explore a sale amid pressure from activist hedge fund Elliott Management Corp., which said the shares were undervalued. Bass Pro said Monday it would pay $65.50 per share in cash for the company, representing a premium of 19.2% over Friday’s closing price.
“A driving force behind this agreement is the highly complementary business philosophies, product offerings, expertise and geographic footprints of the two businesses,” the companies said in a news release.
Bass Pro CEO Johnny Morris founded the retailer in 1972, working out of the back of his father’s liquor store in Springfield, Mo. The company is privately held and also owns White River Marine Group, which makes fishing boats.
“Today’s announcement marks an exceptional opportunity to bring together three special companies with an abiding love for the outdoors and a passion for serving sportsmen and sportswomen,” Morris said. “The story of each of these companies could only have happened in America, made possible by our uniquely American free enterprise system.”
Cabela’s co-founder Dick Cabela died in 2014 and was succeeded as chairman by his brother Jim. As Reuters reports, the company “has grappled with declining sales of apparel and footwear and has reported same-store sales growth in only one quarter in more than three years.”
“Still, the company maintains a loyal following, with many customers willing to drive miles to shop at stores, as well as dine at its restaurants and visit its shooting ranges,” Reuters added.
In trading Monday, Cabela’s shares rose 15% to $63.18. The Elliott hedge fund now stands to make a profit of $419.2 million, nearly double what it paid to buy an 11.1% stake in Cabela’s, according to regulatory filings.