We’ve known for a while that Bass Pro Shops plan to acquire Cabela’s (NYSE: CAB) was receiving stricter scrutiny by antitrust regulators than analysts originally thought it would, and the sporting goods retailer admitted the sale of its banking arm to CapitalOne Finance (NYSE: COF) was going to be difficult; the financial services firm just said the other day its involvement in the deal was all but dead.
During CapitalOne’s earnings conference call with analysts on Wednesday, Chairman and CEO Richard Fairbank said he expected to either withdraw his company’s application to acquire Cabela’s World’s Foremost Bank unit or have the application denied by the Comptroller of the Currency.
Fairbank explained that CapitalOne didn’t expect to be able to get regulatory approval for the purchase by Oct. 3, “the day when any of the parties involved in either the retailer deal or the bank deal can choose to terminate the transaction.” He said in a typical deal, a bank could just withdraw its application before receiving a denial, but because CapitalOne’s offer is part of Bass Pro’s merger deal, that would require the financial services giant to get approval from Cabela’s first.
Moreover, because CapitalOne is still operating under a consent order from the Comptroller due to money laundering violations a few years ago regarding a check-cashing business it once operated, it won’t be able to refile its application until it completes the AML work that is ongoing. It says it remains committed to helping Bass Pro Shops and Cabela’s complete their merger, but it’s apparently out of the picture now.
When Bass Pro offered to buy Cabela’s for $65.50 per share — or about $5.5 billion, including debt — last October, it was seen as a fairly straightforward and complementary deal. Although the two retailers were among the biggest in their niche, it was still a fragmented industry and the two didn’t have too much overlapping territory, but regulators in both the U.S. and Canada wanted to give the deal closer scrutiny.
In Cabela’s regulatory filing at the time, it said the additional information being sought would extend the waiting period before the deal could be consummated, though it still expected the deal to win FTC approval in the first half of the year. Even so, it also said “no assurance can be given that clearance will be received within such time frame or at all.” While that’s boilerplate for most deals, with another portion of the transaction having gone sideways, it adds an additional layer of uncertainty to the whole.
10 stocks we like better than Cabela’s
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Cabela’s wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 4, 2017
Rich Duprey has no position in any stocks mentioned.
Bass Pro's Acquisition of Cabela's Is Coming Apart
No comments:
Post a Comment