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Image source: Cabela"s.

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What happened

Shares of retailer Cabela"s (NYSE:CAB) soared on Monday ~ the agency announced that it had actually agreed to be got by privately hosted Bass agree Shops. At 11 a.m. EDT, the stock to be up about 14.5% come $62.95, a few dollars short of the $65.50 offer price.

So what

Bass agree Shops will certainly pay about $4.5 exchange rate in cash for Cabela"s, with an aggregate transaction value of around $5.5 billion. This price to represent a 19.2% premium come the closeup of the door price ~ above Sept. 30 and also a 39.7% premium come the close up door price top top Dec. 1, the day before news that Cabela"s to be considering strategic alternatives an initial broke. Cabela"s expects the transaction to close during the first half the 2017, subject to shareholder and regulatory approval.

"Having undertaken a thorough strategy review, during which we assessed a wide selection of options to maximize value, the board unanimously concluded the this combination with Bass pro Shops is the ideal path forward for Cabela"s, that shareholders, outfitters and customers," said Cabela"s CEO Tommy Millner. "In enhancement to providing far-ranging immediate value to our shareholders, this partnership provides a unique platform native which our brand will certainly be incredibly well positioned to proceed to serve outdoor enthusiasts worldwide for generations to come."

Announced together with the acquisition was a multiyear partnership through Capital One. Cabela"s CLUB, the company"s co-branded credit transaction card, will certainly be serviced by the bank, and also existing Cabela"s club customers must see no change due come the transaction.

Now what

Shares that Cabela"s have been slumping for the past couple of years, with a cable of blended and an unfavorable earnings reports sending the share lower. The deal price of $65.50, when well above the 52-week low of $33.03, is still listed below a top of over $70 per share got to in early on 2014.


CAB data through YCharts.

The market price worths Cabela"s at about 1.1 time trailing-12-month sales and also 24.5 time TTM net income. Cabela"s operating margin was 7.7% in 2015, under from a top level that 10% reached in 2013. Bass pro Shops will no doubt aim to boost Cabela"s profitability walk forward.

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