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 (NYSE: 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.

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.