Cabela’s Inc. was quietly considering selling the company in early 2015, months before activist investor, Elliott Management, pushed the retailer to explore strategic alternatives, including a sale.

That’s according to recently-filed documents by Cabela’s with the Securities & Exchange Commission that details the background that led to Bass Pro’s blockbuster deal to merge with Cabela’s. The deal was publicly announced in October 2016.

The filing also details the reservations of James Cabela, co-founder of the company and executive chairman of the board, to selling to company, especially one that would shutter the retailer’s headquarters in Sidney, NE.  He owns about 16 percent of the company.

The filing notes that during the winter and spring of 2015, Cabela’s conducted a thorough review of its cost structure and developed a number of cost saving initiatives as part of an initiative entitled “Project Apex.” In June of that year, a number of the recommended initiatives were implemented. The company also began developing a five-year strategic growth plan that eventually culminated in its “Vision 20/20” program.

Around that time, Hirzel Capital Management, a stockholder of the company, had sent a letter to Cabela’s board recommending that the company monetize its real estate and CLUB credit card account operations assets. At its June 4, 2015 board meeting, Cabela’s along with representatives of Guggenheim Securities reviewed a variety of potential strategic alternatives that could be considered, including a recapitalization, a sale-leaseback transaction, an OpCo/PropCo transaction, an acquisition, a CLUB transaction and a sale of the whole company.

On July 8, 2015, Guggenheim was formally retained as a financial advisor. Guggenheim contacted five private equity firms about a potential sale of the retail business while five financial institutions were reached about acquiring the credit card operations. But only one of the financial institutions signed a confidentiality agreement at the time.

At a board meeting held on August 11, 2015, Guggenheim and directors again discussed various potential strategic alternatives, but the board decided to authorize a share repurchase and continue to implement Project Apex and Vision 20/20. Cabela’s writes in the filing, “The board concluded that based on the current environment and the company’s existing cost savings and other similar initiatives, the company would authorize a share repurchase program but would cease the broader exploration of potential strategic alternatives. Consistent with this determination, Guggenheim Securities was instructed to cease working on a review of potential strategic alternatives.”

It wasn’t until October 2015 that representative of the activist hedge fund Elliott Management Corp. informed Cabela’s that it had acquired approximately a 10 percent stake in Cabela’s and was looking to engage in discussions with the company regarding potential strategic alternatives, including an outright sale.

Following media attention after the stake and Elliot’s management’s intentions were revealed in an SEC filing on October 28, 2015, Cabela’s said it received communications from certain other stockholders of the company suggesting that the company consider a sale.

On November 5, 2015, John Morris, the founder and CEO of Bass Pro, called a Bass Pro director to indicate his interested in exploring a potential acquisition of Cabela’s. On November 9, another unidentified industry participant sent a letter to the company expressing its interest in exploring a potential acquisition of the company. Guggenheim had also received inquiries from several private equity firms regarding exploring an acquisition of the retail business as well ones from several financial institutions regarding a CLUB sale transaction

By November, 20, representatives from Elliot’s management indicated they believed the company should be sold through a public auction. The investment firm further threatened that “if the company did not engage in a sales process, EMC was prepared to take further steps with respect to the company.” Rumors also began circulating around the possible sale to Bass Pro at the time.

Soon after, Cabela’s management recommended that the board authorize the company to explore potential strategic alternatives and that the company publicly announce it was doing so. At the same time, however, James Cabela had informed the board that he was not certain he would be willing to, in his capacity as a stockholder of the company, support any deal. He owns approximately 16 percent of Cabela’s shares.

The board met again on December 1, 2015 at a special meeting and agreed to publicly announce the formal exploration of the sale. Cabela’s wrote in the SEC filing, “The board noted that it believed doing so would allow the company to maintain control of the process and reduce the level of uncertainty that was causing problems for the business.”

Cabela’s first began to open up bidding on its CLUB business and by mid-March 2016, seven potential bidders for a CLUB sale transaction submitted responses.

In spring 2016, it began to prepare a confidential information memorandum for the company’s retail business in order to assist in the submission of indications of interest by the potential retail transaction bidders. In early April 2016, the company gave potential bidders for a retail transaction access to a virtual data room that included high-level financial information with respect to the company as well as the confidential information memorandum prepared by the company for the potential retail transaction.

In early May 2016, the company received nine indications of interest from interested retail bidders for an all-cash acquisition of the company.

By early June 2016, James Cabela had informed the board that he would not likely vote his shares of the company in support of proposed transaction if any potential bidder intended to move the company’s headquarters out of Sidney. Dennis Highby, Cabela’s former CEO, also indicated that he would not be inclined to vote his shares for such a transaction. The remaining directors indicated they did not have a similar predisposition.

By October 2, the deal was being finalized with Bass Pro. James Cabela and Dennis Highby agreed to enter into voting agreements with Bass Pro on identical terms as the other directors, except that their voting agreements would also include language regarding the statements Bass Pro would make in its press release announcing the transaction with respect to post-closing operations in Sidney, NB.

The language in the release eventually 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.”

Nearly one-third of the town, or around 2,000 people, work for Cabela’s.

The merger agreement was made public on October, 3, 2016. Under the initial deal, Bass Pro agreed to pay $65.50 per-share for Cabela’s in a deal, including debt, valued at $5.5 billion.

On April 18, 2017, Cabela’s agreed to reduce the price of its Bass Pro deal to $61.50 per share, lowering the deal’s value to about $5 billion. While Cabala’s hasn’t revealed why it lowered the price, the revision came as Cabela’s reworked its separate deal to sell its CLUB credit card business.

Under the new arrangement, Synovus Financial Corp will now buy certain assets of Cabela’s financial division, World’s Foremost Bank, and then resell the credit card portfolio within the unit to Capital One Financial Corp.

As part of separate part of the original Cabela’s-Bass Pro merger, Capital One was expected to acquire World’s Foremost Bank. In late December, however, Capital One said it didn’t expect its part of the deal to be approved by the Treasury Department’s Office of the Comptroller of the Currency by October 3, the date after which either Bass Pro or Cabela’s could terminate their mega-merger.

In revising the offers, Cabela’s said expects the Bass Pro merger to close in the third quarter, as planned.

Photo courtesy Cabela’s