The review of the merger between Cabela’s (NYSE: CAB) and Bass Pro Shops has been extended for another month in both the U.S. and Canada after the Federal Trade Commission asked both sides for more information about the proposed $5.5 billion deal. The Canadian Competition Bureau also has extended its waiting period for reviewing the deal.
In October, Bass Pro offered to buy Cabela’s for $65.50 a share, a 19% premium to its previous day’s closing price and a 40% premium to its Dec. 1, 2015 closing price, the day before Cabela’s revealed it was exploring strategic alternatives. Further, the offer, which includes Cabela’s debt, but not its bank — already sold to Capital One Finance for $200 million — is almost twice the value at which it traded last October, just before activist investor Elliott Management disclosed it had taken an 11% stake in the sporting goods retailer and said it would push management to sell the company.
Cabela’s has been struggling for some time, but in more recent periods, its troubles have been tied to weak sales of footwear and apparel, industry-wide issues that have also caused a number of other retailers including Eastern Mountain Sports and Sports Authority to declare bankruptcy.
Cabela’s filed a notice with the SEC on Nov. 29, saying it was refiling its merger application with all of its regulators, giving them until Dec. 29 to decide whether to ask for more information. It had originally filed a Hart-Scott-Rodino Act application with the Justice Department and the Federal Trade Commission on Oct. 25, which would have given the regulatory agencies a deadline of Nov. 25 to review the merger, but they received a request for more information about the merger on Nov. 24, so they withdrew their application. Similar requests were received from Canadian regulators.
It’s not uncommon for large mergers to receive second requests for information. It happened when Anheuser-Busch InBev was seeking to purchase SABMiller, and as the subsequent approval of that massive deal indicates, such requests are not a death sentence. But new conditions were put on A-B InBev in the wake of the extended review, and it’s possible that something similar could happen with the Cabela’s and Bass Pro Shops deal.
The merger was originally scheduled to close in the first half of 2017.
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