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Cabela’s tumbles after warning that Bass Pro deal faces scrutiny

By Bynick Turner Bloomberg

Cabela’s Inc. suffered its worst stock decline in more than a year after warning that its $5.5 billion acquisition by Bass Pro Group faces additional review by regulators.

Cabela’s has received a second request for information from the Federal Trade Commission, according to a regulatory filing. 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 scrutiny puts a cloud over a deal that promised an almost 20 percent premium to Cabela’s shareholders when it was announced in October. The transaction would unite two of America’s largest outdoors retailers and fulfill a wish by Elliott Associates, the activist investor that had pushed Cabela’s to put itself on the block.

The stock fell as much as 7 percent to $57.36 in New York on Friday, the biggest intraday decline since October 2015. Before the drop, Cabela’s had been up 32 percent this year.

Antitrust officials issue second requests to determine whether a merger harms competition. The requests are routine and don’t necessarily signal enforcers will challenge a deal. Cabela’s said it continues to expect the Bass Pro deal to clear in the first half of 2017, “however, no assurance can be given that clearance will be received within such time frame or at all.”

The credit-card transaction, meanwhile, faces a longer delay. Capital One no longer thinks the Office of the Comptroller of the Currency will approve the deal in the first half of next year, according to the filing.

The sale is still expected to clear, but probably not before Oct. 3 — the date after which any party in the deal has the right to terminate agreements. Alternative arrangements are being pondered that could let the transaction be completed in time, Cabela’s said.

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