Report: Cabela’s to Sell Credit-Card Business

By author of The Duck Blog

Surprise Move Might be Precursor to Complete Sale

Sources say Cabela's intends to sell its lucrative credit-card business. Ken Wolter/ Recent reports say Cabela’s will look to sell its profitable credit-card business before the entire company goes on the block.

The New York Post, citing anonymous sources, said Jan. 21 the surprise move has prompted speculation about when — even if — the giant hunting, fishing and outdoor gear retailer eventually sells. Meanwhile, the report said rival outdoors titan Bass Pro Shops, which had been rumored to be interested in acquiring Cabela’s, is “stuck on the sidelines as banks kick the tires of the credit card operation.”

The Post article said Cabela’s is seeking special conditions to sell its credit-card business, which accounts for about 30 percent of the chain’s $3.6 billion in sales. The company wants to retain the profit stream from the business, which would release it of regulatory oversight and increase profits. That prompted “some close to the process” to wonder if a sale of the entire business would ever occur. However, the Post said the move could make the company easier to sell.

Either way, the Post sources said, the issues have slowed the sales process, which started in October 2015 when activist investor Elliott Management purchased an 11 percent stake in Cabela’s. The group then pressed Cabela’s management to seek strategic alternatives, including a sale.

A Post source predicted that it will become clearer in two months whether Cabela’s is serious about selling the entire business. All the company’s directors are up for election, and Cabela’s has postponed the time it will accept board nominations until it sets its annual meeting date. The 2015 meeting was held in June. A source said Elliot Management could launch a proxy fight, which is an event during which a group of shareholders in a company joins together to change an area of corporate governance.

Cabela’s shares are down by about 29 percent the past 12 months, the Post said. The company, based in Sidney, Neb., has about 60 retail stores and employs almost 20,000 people.