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Implications Of Bass Pro Shops' Cabela's Partnership With Capital One

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After Cabelas Inc's (NYSE: CAB) Bass Pro Shop announcement, the outdoor retailer’s shares rose nearly 15 percent.

The company also announced a corresponding deal with Capital One Financial Corp (NYSE: COF), with Capital One originating and servicing the Cabela’s CLUB co-branded credit card.

The transaction is expected to close in the first half of 2017, according to Goldman Sachs analyst Stephen Tanal, pending shareholder and regulatory approval.

Capital One will purchase $5.2 billion in credit card receivables from Cabela’s and also assume $5 billion in liabilities. The 10-year agreement will also include revenue and loss-sharing provisions, the terms of which haven’t been disclosed. According to Tanal, customer use of loyalty programs and credit cards will be unaffected.

“COF doesn’t expect the transaction to impact its announced capital plan,” said Tanal, noting that Cabela’s portfolio holds an about 794 median FICO score (2015).

Goldman Sachs is Neutral rated on Capital One with a 12-month price target of $77.

Latest Ratings for CAB

DateFirmActionFromTo
Oct 2016DowngradesOverweightEqual-weight
Oct 2016DowngradesBuyHold
Feb 2016UpgradesHoldSpeculative Buy

View More Analyst Ratings for CAB
View the Latest Analyst Ratings

Posted-In: Goldman SachsAnalyst Color Analyst Ratings

 

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