# Bass Pro officially buying Cabelas



## #1DEER 1-I (Sep 10, 2007)

http://www.businessinsider.com/bass-pro-shops-to-acquire-cabelas-2016-10

Don't know how to feel about this. I've always loved Cabelas. Cabelas allowed some ammo purchases online and a few things BassPro doesn't do, I hope it doesn't change Cabelas a lot.


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## Bax* (Dec 14, 2008)

I haven't ever shopped at Bass Pro so I cant really say how I feel about this (not that my opinion matters). But so long as their "store brand" product quality doesn't drop, I will still be happy.

I really like some of the Cabelas brand items I have bought over the years, and would be disappointed to see them stop carrying certain items.

Cooky, do you have any insight?


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## mjensen1313 (Jul 29, 2015)

I lived about a 10 minute walk from the Bass Pro in Missouri for a while; always loved it! Now I'm only a 5-minute drive from Cabela's in Lehi; always love Cabela's too.

Just hope their service stays a priority. Shopping in both, service has been regularly better at Cabela's but both are better than at Sportsmans. Been to Scheels once, won't go back.


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## Rspeters (Apr 4, 2013)

I used to live near a Bass Pro Shops and was in one as recently as a month ago. Although it does have a very similar feel as compared to Cabelas, I've always preferred Cabelas because of it having a seemingly more well-rounded selection. Plus the prices always seemed to be better at Cabelas. And the firearms section at the Bass Pro Shops I've been to is nowhee near the size, and prices of Cabelas.

I'm personally not happy about this and I feel that the competition between Bass Pro Shops and Cabelas used to keep each other's prices in check...now that won't be the case.


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## DallanC (Jan 13, 2009)

Sheeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeettttttttttttttttttttttttttt.................

I wish they had both stores here to compete. There is a specific shoe Cabelas carries I've worn for now for 10 years, love them. I usually buy a couple pair and keep them on hand to use when the current set wears out (I actually just got out a new pair this week to replace my current pair I've worn for 1.5 years). I'll bet this gets discontinued when BassPro buys them. I better go buy 10 pair or so to last me the next decade.


-DallanC


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## Rspeters (Apr 4, 2013)

One last thought, I would much rather have had Cabela's buying out Bass Pro Shops than BPS buying out Cabelas.


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## LostLouisianian (Oct 11, 2010)

I've been to both quite a number of times, I prefer Cabela's to BPS. I doubt they will change much other than consolidate management in the corporate offices and cancel any store plans that would compete with an existing store location.


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## willfish4food (Jul 14, 2009)

I've been to both quite a bit. I was glad when Cabela's beat out BPS to build a store in North Alabama. I'll admit the BPS I've been to have been neater; they seem to go the extra mile in dressing their stores up. BUT, it seem like that's reflected in their pricing. Cabela's ain't cheap and about everything at a BPS seems more expensive. 

I've also become a fan of a lot of Cabela's brand merchandise, so I hope their quality doesn't decline any.


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## Karl (Aug 14, 2016)

#1DEER 1-I said:


> http://www.businessinsider.com/bass-pro-shops-to-acquire-cabelas-2016-10
> 
> Don't know how to feel about this. I've always loved Cabelas. Cabelas allowed some ammo purchases online and a few things BassPro doesn't do, I hope it doesn't change Cabelas a lot.


Thanks for the update.

I felt the same way when Cabelas bought Gander Mountain.

It happens.

In this case it seems somewhat ironic because Cabelas is bigger -- almost twice the annual revenues ($4Bil) of Bass ($2.6Bil).

I get most of my 300 RUM and 45ACP ammo from Cabelas, so I hope the ammo page does not suffer.

45ACP ammo is easy to find, but 300 RUM ammo is harder, especially in 200 grain bullets.


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## Cooky (Apr 25, 2011)

Bax* said:


> I haven't ever shopped at Bass Pro so I cant really say how I feel about this (not that my opinion matters). But so long as their "store brand" product quality doesn't drop, I will still be happy.
> 
> I really like some of the Cabelas brand items I have bought over the years, and would be disappointed to see them stop carrying certain items.
> 
> Cooky, do you have any insight?


Not really, a six page e-mail in my inbox this morning that pretty much says everything will be alright and nothing will change at all for nearly a year. Then, Cabelas shareholders will be bought out and Cabelas will be owned by people in the outdoor product business again, not "investors" (got to be a good thing). Bass Pro says they know that Cabelas has good things going and aren't going to mess with it.

Personally, I'm thinking employee pricing on a Party Barge! OOO°)OO


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## Karl (Aug 14, 2016)

This story finally hit the TV news locally, and they said Bass is big in the US East whereas Cabelas is big in the US West.

Nothing much should change for areas where there is only one store.

For areas where there are both stores, one of them might become consolidated into the other.

Purchase price was around $4.5 billion, which is about Cabelas' annual revenue.

The financial story below says the VC fund ownership of Cabelas noted that their stock was "undervalued" meaning that the Cabelas management was doing a poor job of running the company.

That gave Bass the opportunity to jump in and double their own size with the acquisition.

Since the stock of Cabelas suddenly jumped $15 per share it is validation that the management was doing a poor job. Wall street agrees with this evaluation.

http://www.usatoday.com/story/money/2016/10/03/bass-pro-shops-cabelas-acquisition/91459212/


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## Critter (Mar 20, 2010)

It has been all over the news the last couple of days. 

But then I guess it depends on where you get your news from.


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## Loke (Sep 7, 2007)

Critter said:


> But then I guess it depends on where you get your news from.


I get mine from the most reliable source on the web. the UWN.


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## Karl (Aug 14, 2016)

I'm glad there isn't anything that I currently need from Bass or Cabelas.

I'll need more ammo eventually. But not now.


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## CPAjeff (Dec 20, 2014)

NERD ALERT! 

I just couldn't help myself and did a valuation of both companies - it my opinion, Bass Pro did Cabela's a huge favor - basically saving it from bankruptcy. Here are two large indicators of this, levered free cash flow (which is the amount of cash a company has left remaining after paying all its financial obligations) and the total debt to equity ratio. Basically, Cabela's is leveraged to the hilt. 

According to US GAAP, there are three ways to value a company - market approach, income approach, and cost approach. 

The market approach is a way of giving an asset value, based on comparing the asset to other similar items, and what the value of those items are. The market approach is heavily used in the real estate market, as similar homes in similar neighborhoods will have similar values. The market approach will take into consideration the recent sales of a similar items and then any adjustments for size differences, quality, or quantity can be made to find the fair market value.

The income approach is an approach that gives value to an operation that generates cash flow, a rental home would be an asset that could be valued under the income approach. One would consider the amount of rental revenue received, the current and future market value of the home, current and future upgrades/repairs that would need to be completed to ensure that the rental home is habitat able. By determining these factors, one can give a relative market value of the home and decide if investing in it is a smart decision.

The cost approach states that the price a buyer should pay to replace the service capacity of an asset. This means that if I were to give value to a business that I was interested in purchasing, I would need to take into consideration all the costs associated with getting the business to where it is today. That would mean that the market value of their marketing schemes, the prices of PPE, current value of assets, current liabilities, etc. Basically, the business is worth what it would cost me to establish a similar business and receive similar results.

After looking at Cabela's balance sheet, they are $4.74B in debt, so Bass Pro basically acquired Cabela's by paying off their debt. Also, Cabela's net income in 2015 was $183.15M - meaning they would have to average that same net income, without additional financing (debt) for 25.88 years just to pay off their current debt. WOW!! Ok - bringing things back down to normality - I have to say that both stores about more about the experience and less about the selling of goods. Bass Pro does a far better job at economies of scope within their stores than Cabela's. I'm glad I have the wonderland of Smith and Edwards close to my parent's that I can stop at when I go to visit!


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## LostLouisianian (Oct 11, 2010)

CPA thanks for the financial data. Those of us with a business background understand it. Net income really sucks for such a large company, wow!


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## Critter (Mar 20, 2010)

CPA, that is what I have been hearing also. 

Cabela's spread themselves way to thin with all the new stores that they have to pay for and to keep stock in. That adds up to a whole bunch of money. 

Now if they would of stayed mostly in the catalog business only they might of been the one buying out Bass Pro.


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## wyogoob (Sep 7, 2007)

Loke said:


> I get mine from the most reliable source on the web. the UWN.


Yeah buddy, I'd like to have a nickel for every time I heard that!

.


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## Idratherbehunting (Jul 17, 2013)

CPAjeff said:


> NERD ALERT!
> 
> I just couldn't help myself and did a valuation of both companies - it my opinion, Bass Pro did Cabela's a huge favor - basically saving it from bankruptcy. Here are two large indicators of this, levered free cash flow (which is the amount of cash a company has left remaining after paying all its financial obligations) and the total debt to equity ratio. Basically, Cabela's is leveraged to the hilt.
> 
> ...


This is an excellent analysis.


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## Idratherbehunting (Jul 17, 2013)

Karl said:


> This story finally hit the TV news locally, and they said Bass is big in the US East whereas Cabelas is big in the US West.
> 
> Nothing much should change for areas where there is only one store.
> 
> ...


I disagree with this conclusion. To me, an undervalued stock means that the market is not efficient, not that management is doing a poor job. An *overvalued* stock would imply that that current fair value of the company is considered to be less than what the trading value is currently, and would imply that investors do not believe that management will reach the results they are forecasting.

Just for perspective, Warren Buffet's investment strategy is to identify undervalued companies based on his own analysis, and then acquire the company.

In this instance, I think Bass Pro shop greatly strengthened their brand by acquiring one of their largest competitors. I suspect that they will continue to operate both brands with their existing stores.


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## LostLouisianian (Oct 11, 2010)

Idratherbehunting said:


> I disagree with this conclusion. To me, an undervalued stock means that the market is not efficient, not that management is doing a poor job. An *overvalued* stock would imply that that current fair value of the company is considered to be less than what the trading value is currently, and would imply that investors do not believe that management will reach the results they are forecasting.
> 
> Just for perspective, Warren Buffet's investment strategy is to identify undervalued companies based on his own analysis, and then acquire the company.
> 
> In this instance, I think Bass Pro shop greatly strengthened their brand by acquiring one of their largest competitors. I suspect that they will continue to operate both brands with their existing stores.


The economies of scale in upper management should allow BPS to jettison a lot of the bloated management of Cabela's corporate structure. There won't be much economies of scale in product purchasing as both probably are getting the best prices available. Trimming overhead in the form of un-needed personnel will be the key to profitability.


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## Idratherbehunting (Jul 17, 2013)

LostLouisianian said:


> The economies of scale in upper management should allow BPS to jettison a lot of the bloated management of Cabela's corporate structure. There won't be much economies of scale in product purchasing as both probably are getting the best prices available. Trimming overhead in the form of un-needed personnel will be the key to profitability.


The other interesting thing that I am looking forward to seeing is how much of the cabelas branded items they continue to use. A lot of Cabelas inventory is cabelas branded. I am not familiar enough with their operations to know how the margins compare on those types of things compared to the other product mix, but it doesn't seem that Bass Pro Shop has their own product lines at near the same level. So I'm interested to see if that continues as well.

It is going to be interesting to see what types of changes occur in the coming months.


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## LostLouisianian (Oct 11, 2010)

Typically store name branded items carry a significantly higher profit margin than other products.


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## Rspeters (Apr 4, 2013)

If anything, maybe BPS will start carrying some of the cabelas branded items (or taking the same products and putting the BPS name on them). I could see that being beneficial, then I might actually go into a BPS.


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