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The
move gives Bass Pro the equity financing necessary to pursue
Cabela's and makes such a deal more likely, given the potential
cost savings and synergies a combination of the two U.S. hunting
and finishing retailers would bring.
Cabela's shares ended trading up 6.4 percent at $52.51 on
Tuesday, after jumping as much as 8.4 percent on the news,
giving the company a market capitalization of $3.6 billion.
Sidney, Nebraska-based Cabela's said in December it was working
with investment bank Guggenheim Securities LLC to explore
strategic alternatives including a sale, following pressure from
activist hedge fund Elliott Management Corp.
Bass Pro and Goldman's consortium faces competition for Cabela's
from buyout firms, and the sale process is still in the early
stages, the sources said on Tuesday.
Cabela's has also been exploring selling its credit card
business separately and received expressions of interest from
other potential buyers, the sources added.
The sources asked not to be identified because the deliberations
are confidential. Bass Pro and Cabela's did not respond to
requests for comment, while Goldman declined to comment.
As the broader sporting goods industry struggles to compete
against online retailers such as Amazon.com Inc, Cabela's and
Bass Pro are offering experiences not easily replaced digitally,
such as museum-quality taxidermy and shooting galleries.
Many private equity firms have refrained from investing in
sporting goods retailers that sell firearms for fear of
upsetting some investors. Exceptions include KKR & Co LP's
acquisition of Academy Sports + Outdoors in 2011, and Leonard
Green & Partners LP's takeover of Sports Authority Inc in 2006.
Goldman, however, taps private equity investors on a
deal-by-deal basis, rather than by using a fund, so investors
who do not wish to participate can opt out without already
having committed to a fund.
Springfield, Missouri-based Bass Pro Shops was founded in 1971
by Johnny Morris, who still owns most of the company. Bass Pro
has roughly 100 stores across North America. Reuters reported in
November that Bass Pro was exploring a bid for Cabela's.
Cabela's was founded in 1961 by Dick Cabela and has roughly 80
stores in 36 U.S. states and nine in Canada. It also runs a
large catalog business, which contributes roughly 24 percent of
sales.
(Reporting by Lauren Hirsch and Greg Roumeliotis in New York;
Editing by Jeffrey Benkoe and Matthew Lewis)
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