Outdoor Insight

s /UTDOOR )NSIGHT s *ULY outdoorinsightmag.com W ell, it looks like it is going to happen after all. After an optimistic start, numerous regulatory roadblocks, a changing retail landscape and, finally, some convoluted financial dealings, it seems the much- anticipated merger of two outdoor spe- cialty players – Bass Pro Shops and Cabela's – just may take place in the third quarter. Or maybe not. But all of the signs are pointing north after a series of early Spring negotiations cleared the way. It was back in the Fall of 2016 that Bass Pro Shops announced it had reached an agreement to acquire Cabela's and take the company private in a deal valued at $5.5 billion. (The story actually began in early 2015, when Cabela's developed a five- year strategic growth program; then, in early 2016, Cabela's effectively put itself up for sale at the urging of hedge fund Elliott Management.) The initial deal called for privately held Bass Pro Shops to pay $65.50 per share in cash for Cabela's. It was later reduced to $61.50 per share, lowering the deal's value to about $5 bil- lion. While Cabela's hasn't revealed why it lowered the price, the revision came as Cabela's reworked a separate deal to sell its credit card business. One initial sticking point was the concern of co-founder and executive chairman James Cabela, who owns about 16 percent of the company, that any buyer would close the company's headquarters in Sidney, NE (according to one report, nearly one-third of the town, or around 2000 people, work for Cabela's). In the end, the agreement read "Bass Pro Shops intends to continue to maintain important bases of operations in Sidney and Lincoln and hopes to continue the very favorable connections to those communities and the Cabela's team members residing there." With James Cabela's concerns alleviated, it then seemed that there were enough degrees of separation that should have allowed the deal to move forward with relative ease. Cabela's operates some 85 stores in 36 states, mostly in the West, with nine more locations in Canada. Bass Pro Shops has about 100 stores, mostly in the Midwest and East Coast. Moreover, Cabela's specialty is hunting while Bass Pro's is, of course, fishing. Alas, the next chapter in this story wasn't easily writ- ten. Apparently there were some skeletons in the financial closet of Capital One, which had agreed to pay about $200 million to originate and service Cabela's co-branded credit card for 10 years while acquiring the credit card operations. So the proposed merger floun- dered throughout early 2017 until a sudden announcement in April that the two companies would move forward after revising the financial specifics. Cabela's has now agreed to sell its banking business to Synovus Finan- cial, which will acquire Cabela's World's Foremost Bank and retain the $1.2 billion in deposits, then sell the bank's credit card business to Capital One. Capital One will be the issuing partner for Cabela's store-branded credit card. Got all that? Good. In effect, Bass Pro will still buy the retail business, which had 2016 sales of $4.13 billion. The transaction would obviously be a good fit for the two since both retailers have the same roots in Americana, actively support outdoors conservation efforts, target the same customer and even offer a fairly similar retail experience. The combination brings together three of the nation's premier sporting brands: Cabela's, a leader in hunting; Bass Pro Shops, a leader in fishing; and White River Marine Group, a leader in boating, which is part of Bass Pro Shops. "This merger of resources, experience and passion for the outdoors represents a unique opportunity for both organiza- tions," said Bass Pro founder Johnny Morris. "This really is a once-in-a-lifetime opportunity." Cabela's CEO Tommy Millner, in turn, called Bass Pro "the ideal partner" and described the merger as "the best path for- ward for Cabela's, its shareholders, outfitters and customers." It appears that Bass Pro, which is closely held and does not release sales figures, has been able to maintain its mo- mentum as it develops plans to swallow up a major competi- tor. The continued expansion suggests Bass Pro's long-held strategy — to be not just a store, but a destination — hasn't been overly disrupted by the rise of online shopping or other factors affecting the retail sector in general. But product is what makes the money at Bass Pro Shops, which at its heart is an outdoor store (and catalog and website) that specializes in hunting, fishing and camping. O 20 17 CABELA'S/ BASS PRO SHOPS HAPPY TOGETHER? BULLET POINTS Momentum at Cabela's slowed in the first quarter of 2017, when revenue decreased 3.4 percent to $834.9 mil- lion, revenue from retail store sales decreased 3.9 percent to $542.0 million and Internet and catalog sales were down 12.6 percent to $136.1 million. For the quarter, comparable store sales decreased 9.1 percent and net income decreased 16.7 percent. "We contin- ued to experience chal- lenging traffic patterns in the first quarter," Cabela's CEO Tommy Millner understated. The proposed deal marks a dramatic expansion of the out- door retailing empire controlled by Johnny Morris, who founded the company in 1972 and who will lead the newly combined entity as CEO and will retain majority ownership. TRAIL MIX Bass Pro Headquarters Springfield, MO Stores 100 Website basspro.com Sales Privately Owned TRAIL MIX Cabela's Headquarters Sidney, NE Stores 85 Website cabelas.com Sales $4.13 billion The late-2017 merger of two industry powerhouses promises to change the outdoor game. Bass Pro and Cabela's employees share a passion for the outdoors and, of course, selling.

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