The duo are joined by other private equity firms who also want a piece of the action.
According to sourced familiar with the matter at hand, Bass Pro Shops, a private held outdoor retailer, has partnered with Goldman Sachs Group Inc. to make an offer for Cabela’s Inc., a U.S. based hunting and fishing store chain.
With Goldman Sachs on board, Bass Pro is likely to have the much needed financial muscle power to pursue Cabela’s. If the deal were to succeed, it could benefit Bass Pro considerably given the common synergies and potential cost savings.
On Tuesday, with this information hitting the news circuits, Cabela’s shares jumped up by 8.4% to $52.51 providing it with a market capitalization of $3.6 billion.
Late last year in December, Cabela’s had said it was working with Guggenheim Securities LLC, an investment bank, to explore alternative strategies, which included a sale, following pressures from Elliott Management Corp, an activist hedge fund.
As per sources, Bass Pro and Goldman are not alone in their bid to buy Cabela’s. The sale process though, is still in its early stages.
Broadly speaking, the sporting goods industry, is struggling against its online rivals such as Amazon. Bass Pro and Cabela’s however, haven’t been less affected by this completion since they offer experiences which are, quite frankly, hard to replace digitally: shooting galleries and museum quality taxidermy.
Incidentally, quite a few private equity firms have refrained from investing in sporting goods retailers who sell firearms, for fear of upsetting a select group of investors. Exceptions however include, Leonard Green & Partners LP’s purchase of Sports Authority Inc. in 2006 and KKR & Co LP’s takeover of Outdoors and Academy Sports in 2011.
Significantly, Goldman Sachs taps private equity investors on a deal-to-deal basis, rather than by using a generic fund, thus providing investors who do not wish to participate an exit strategy without having to commit to a fund.
Since the deliberations are an on-going matter and are confidential, the sources preferred the cover of anonymity. Both Cabela’s and Bass Pro didn’t respond to requests for comments. On the other hand, Goldman Sachs declined to comment.