Cabela’s on Friday warned that its $5.5 billion acquisition by Bass Pro Group faces additional review by regulators.
According to a regulatory filing, Cabela’s said it received a second request for information from the Federal Trade Commission. The agency reviews corporate mergers to see whether they create monopolies.
“The issuance of such a ‘second request’ does not indicate that the FTC has concluded that the transaction raises competition concerns,” Cabela’s said in the filing, but rather “reflects a determination by the FTC that it requires additional information to assess the proposed transaction.”
In the filing, Cabela’s said the extra information request extends the waiting period, which also could be extended voluntarily by the two parties or ended sooner by the FTC.
Cabela’s said it still expects the Bass Pro purchase to be cleared by the FTC in the first half of the year, but added, “no assurance can be given that clearance will be received within such time frame or at all,” a standard cautionary note in many such filings.
The company also expects a delay in the completion of a separate deal to sell its credit-card business to Capital One Financial Corp. The filing said Capital One Bank “likely” will not get federal bank regulators’ approval to acquire Cabela’s World’s Foremost Bank before October 3, 2017, when the bank-purchase agreement could be dropped.
Cabela’s said it continues to work toward completing the bank purchase and is looking at “potential alternative structures” that would let the purchase be completed by October 3.
The scrutiny puts a cloud over a deal that promised an almost 20 percent premium to Cabela’s shareholders when it was announced in October.
Bass Pro Shops, Cabela’s and Capital One had said previously they expected both deals to close in the first half of 2017, with the credit-card transaction being contingent on the primary deal closing. A Bass Pro Shops/Cabela’s merger would create a national chain with more than 180 locations, roughly 40,000 workers and control of more than 20 percent of the $50 billion U.S. hunting, camping and fishing market, Stifel analyst Jim Duffy said.
The stock fell as much as 7 percent to $57.36 in New York on Friday, the biggest intraday decline since October 2015. The stock sits below the deal price of $65.50 a share. Before the drop, Cabela’s had been up 32 percent this year.
Photo courtesy Cabela’s
