Specialty outdoors retailer Cabela’s has officially confirmed that is exploring “a wide range” of strategic alternatives to further enhance the company’s value to shareholders. The retailer has already been linked to rival Bass Pro Shops, which has expressed an interest in purchasing Cabela’s since early November.
Activist investment firm Elliott Management, which has an 11% stake in Cabela’s, initially sought out talks with the retailer’s Board of Directors in October regarding a possible sale or an alternative strategy. In an SEC filing, the firm noted that it believed Cabela’s shares were “significantly undervalued by the public market and represent an attractive investment opportunity.”
While Cabela’s once drew up plans to expand its reach from 64 stores to 225 stores in North America, it has since scrapped plans for any immediate store openings beyond 2016. Moreover, the retailer has outlined a corporate restructuring initiative designed to reduce operating expenses and help fund a $500 million share repurchase program. Same store sales in Q3 declined 4%, while the retailer’s net income fell 14%.
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Cabela’s has selected Guggenheim Securities, LLC as its financial advisor and Sidley Austin LLP and Koley Jessen P.C., L.L.O. as its legal counsel to assist in the strategic review.
“The Board is committed to taking actions to enhance value for shareholders and believes it is an appropriate time to explore potential strategic options that may drive further value,” said Tommy Millner, CEO at Cabela’s. “As the Board undertakes this exploration process, Cabela’s is focused on the execution of its business strategy and remains fully committed to serving our customers’ needs.”
