Cabela’s Inc., under pressure from activist investor Elliott Associates to pursue a sale, has started exploring strategic alternatives to enhance shareholder value.
Guggenheim Securities is providing the retailer with financial advice, while Sidley Austin and Koley Jessen are serving as legal counsel, Cabela’s said Wednesday.
Bloomberg News reported last month that Guggenheim had reached out to a small group of potential private equity buyers and strategic acquirers on behalf of Cabela’s, which is based in Sidney, Nebraska.
The announcement that Cabela’s has started a formal strategic review moves the camping- and hunting-gear retailer one step closer to a buyout or other major changes.
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Investors in the company have suggested that Cabela’s also could sell its credit-card business, which has almost $5 billion in loans, or its roughly $1 billion in real estate holdings.
Among the potential buyers of Cabela’s is rival Bass Pro Shops, which is working with JPMorgan Chase & Co. to help explore a bid, people familiar with the matter said last month.
Private equity firms, including KKR & Co., Hellman & Friedman and TPG Capital, also may be interested in bidding for the company, the same people said.
Cabela’s shares rose 2.1 percent to $47.89 at the close in New York. The stock has fallen 9.1 percent this year.
Cabela’s revenue and profit growth have sputtered recently. A surge in gun sales in past years has abated, and the company said in October that “significant weakness” in its fall apparel and footwear offerings contributed to disappointing third-quarter earnings and sales.
Less than a week after Cabela’s reported those results, Elliott disclosed an 11 percent stake in the company and said it would push for a shake-up.
Cabela’s was co-founded by brothers Richard and Jim Cabela in 1961. Richard died last year, and Jim, in his mid-70s, serves as chairman.
The company has 77 stores, all in the U.S. and Canada, including its store on Galaxy Boulevard Northeast in Lacey.