Industry Rumbling: Cabela’s

Here’s the latest on the Cabela’s situation, from our publisher and editor of The Outdoor Wire, Jim Shepherd.
from The Fishing Wire

With SHOT Show barely ended, there are plenty of interesting reports filtering out regarding the industry. More, in fact, than those we were hearing when we arrived in Las Vegas, Nevada for the nearly-impossible task of covering a trade show that has grown more than a quarter-million square feet over the past five years.

Not all the reports we’re hearing are about new products or services, despite the fact we have been fixated on the latest and greatest offerings from the more than 1,200 exhibitors. In fact, most of the questions being asked concern rumors that had begun circulating prior to SHOT.

When a rumors of an acquisition of Cabela’s by Bass Pro Shops died shortly before Christmas, speculation began to spread (on Wall Street) that Cabela’s (NYSE: CAB) was one of those companies that was ripe for change.

That change, according to Wall Street sources, wasn’t necessarily something the company was seeking.

On November 23, Bloomberg Business reported that speculative investors were in favor of seeking a suitor, but would not accept an acquisition price than something “in excess of $60/per share.” Other reports had a target price of nearly $72/share. Those prices, according to sources on Wall Street, were the primary reason BPS quietly disappeared from the picture.

At that time, Bloomberg reported that Hirzel Capital Management, owners of 2 percent of the company, were the activist investor. Bloomberg reported Hirzel was pushing the retailer to consider “strategic alternatives, including selling its credit-card unit and property.” Hirzel’s suggestion was reportedly rejected by Cabela’s CEO Tommy Millner who advocated for spending more than $500 million in a share buyback to boost value.

At that point, Cabela’s rumors quieted.

In today’s news section, you’ll see that Cabela’s is again back in the investment news.

With the fourth quarter and full-year 2015 earnings release set for just before the market opens on February 18, the New York Post is now reporting that the company plans to divest itself of its credit card unit. Nothing from Cabela’s on those reports as of the close of business last night. Meanwhile, the company’s activist investors continue to push for the company to sell- either the credit card division or the entire company.

Cabela’s shares gained eleven cents yesterday, closing at $41.49.

As the rumors continue across the New York and Chicago investment communities, both officials and residents of Sidney, Nebraska remain on edge. Of the approximately 7,000 residents of Sidney, nearly 2,000 work for Cabela’s.

We’ll keep you posted.