By Liz Hoffman and AnnaMaria Andriotis
Synovus Financial Corp. said Monday it had agreed to buy the banking assets of Cabela's Inc., allowing the outdoor retailer's $4.2 billion sale to rival Bass Pro Shops to proceed after hitting regulatory snags.
Capital One Financial Corp. will buy Cabela's credit-card portfolio, while Synovus, a small lender in the southeastern U.S., will acquire the bank's $1.2 billion in deposits. Cabela's shares rose 6% in after-hours trading to $57.
Capital One had planned to buy both financial pieces, but ran into trouble with its regulator. That raised concerns it wouldn't be able to complete the deal quickly enough, and left Bass Pro and Cabela's seeking an alternative buyer for the bank.
The Wall Street Journal first reported that Synovus was in deal talks with Cabela's and Bass Pro last month.
Under the new deal, closely held Bass Pro will still buy the retail business, which generated $3.6 billion in revenue last year selling everything from crossbows to boats. It has financial backing from Goldman Sachs Group Inc. and others.
Synovus will receive $75 million for stepping in to help save the deal. That cost will be borne largely by Cabela's shareholders, who will receive $4 less a share than originally agreed. The new price of $61.50 a share represents a 6% price cut.
Cabela's shares rose 6% after hours to $57. They had traded as low as $45 in February as investors worried the transaction wouldn't be completed, and jumped to $52 on the Journal's story last month.
The World's Foremost Bank -- a play on Cabela's slogan as "the world's foremost outfitter" -- is based in Sidney, Neb. and exists to issue Cabela's branded credit cards. It finances its customer's purchases by issuing CDs, which are largely held by municipal governments and agencies.
That model has gone out of style. Today, most retailers outsource this business to providers like Capital One or Synchrony Financial. Bass Pro's own credit card is issued through Bank of America Corp.
Synovus will acquire the bank's net assets at a $70 million discount, then will resell the credit card portfolio to Capital One, picking up a $5 million premium in the process, according to a regulatory filing.
Synovus has about $30 billion in assets and some 250 branches across Georgia, South Carolina, Tennessee, Alabama and Florida.
Write to Liz Hoffman at email@example.com and AnnaMaria Andriotis at firstname.lastname@example.org
(END) Dow Jones Newswires
April 17, 2017 18:13 ET (22:13 GMT)
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