Regulators Raise Concerns Over Bass Pro Shops, Cabela's Merger -- Update
December 30 2016 - 12:20PM
Dow Jones News
By Austen Hufford
Federal regulators have raised questions over Bass Pro Shops'
$4.5 billion deal to buy fellow outdoor-sports gear retailer
Cabela's Inc., creating hurdles for the completion of the
acquisition and sending shares of Cabela's lower.
In a regulatory filing Friday, Cabela's said two regulatory
approvals for the deal had hit speed bumps. The Federal Trade
Commission requested additional information from Cabela's and Bass
Pro Shops earlier this week. The FTC says the vast majority of
deals are approved without additional information requests, but
Cabela's said the request doesn't mean the agency has concluded the
deal presents any anticompetitive concerns.
Bass Pro Shops declined to comment.
Meanwhile, Capital One Financial Corp., which is buying Cabela's
credit card business as part of the deal, also told Cabela's it
expects a banking regulator, the Office of the Comptroller of the
Currency, to eventually approve the deal -- but not before October,
when the parties to the merger can walk away and well after the
companies involved had expected the deal to close. The OCC said it
doesn't comment on specific banks or deals.
KBW research analysts said the news from Capital One indicates a
lengthening of the banking deal's process. Capital One said it
continues to believe in the value of its relationship with Cabela's
and is working to meet its commitments.
Bass Pro, Cabela's and Capital One had said previously they
expected both deals to close in the first half of 2017 and the
credit-card transaction was contingent on the primary deal closing.
Cabela's said it still expects FTC approval in the first half of
the year, but it was exploring alternative structures for the deal
to allow for a closing before the October deadline.
A Bass Pro-Cabela's merger would create a national chain with
more than 180 locations, roughly 40,000 workers and control of more
than 20% of the $50 billion U.S. hunting, camping and fishing
market, Stifel analyst Jim Duffy has said.
In its annual filing, Cabela's said its markets are fragmented
and competitive but also notes some of the largest competitors,
such as Wal-Mart Stores Inc. and Amazon.com Inc., don't compete in
many of the product lines it offers.
Shares of Cabela's fell 5.6% to $58.25 in morning trading, below
the deal price of $65.50 a share.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
December 30, 2016 12:05 ET (17:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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