Did Bass Pro Shops Just Waste $5.5 Billion on Cabela’s?

After months of anticipation Bass Pro Shops finally made its play for rival outdoor equipment company Cabela’s (NYSE:CAB) and hooked the retailer with an offer of $65.50 per share, or about $5.5 billion, including debt. Although the deal will create a behemoth with almost 200 stores that stretch across the country, 40,000 employees, and a fifth of the market share of the hunting, camping, and fishing industry, it may be paying a bit too much to do so.

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Premium price for a heavily discounted chain

The price Bass has bid represents a 19% premium to Cabela’s closing price on Sept. 30, the day before the acquisition was announced, and a 40% premium to its Dec. 1 closing price — the day before Cabela’s announced it was exploring strategic alternatives — but is almost double the price at which it traded last October just before activist investor Elliott Management disclosed it had taken a sizable 11% stake in the retailer and would push management to sell itself.

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