Cabela's Nearly Year-Long Sale Process Proves The Market Rewards Patience

It has been nearly a full year since Elliott Management disclosed its stake in Cabelas Inc CAB and urged the company to sell itself. As is often the case, the market rewards patience.

According to Gadfly's Gillian Tan, Bass Pro's $65.50 per share offer to acquire Cabelas represents a "whopping" 96 percent premium to its share price on October 27, 2015, the day before Elliott announced its stake and the last time Cabela's stock traded near $65.50 was back in May 2014.

Related Link: Cabela's Downgraded By Barclays Following Monday's 15% Rally

Tan noted that Bass Pro is paying a forward multiple of 9.6 to acquire Cabela which is a premium to the 8.4 multiple PetSmart sold itself at and the 9 multiple Petco sold itself at.

"Just as fishermen celebrate when they land a big catch, Cabela's shareholders can cheer Monday's news that the outdoor-gear retailer just hooked a buyer," Tan wrote.

Meanwhile, Cabela's business is in the midst of a turnaround as a restructuring initiative resulted in lower operating expenses and the company has shown gains in internet, catalog and same-store sales. The last time the company showed gains in all three categories was the third quarter of 2013.

Finally, Cabela's stock traded just north of $63 after the deal was announced on Monday, which represents a "slim" 4 percent discount relative to the proposed takeout price. This reflects a "broad belief" that the deal could proceed and won't face any antitrust or regulatory scrutiny.

"As it turns out, it was worth the wait," Tan also wrote.