After two years of uncertainty, Sidney, Nebraska, could know within the coming months just how devastating the loss of Cabela’s headquarters could be for the town of 6,800.
Cabela’s said last week in a regulatory filing that Bass Pro Shops is expected to close on its $5 billion purchase of the homegrown Nebraska outdoors retailer on or a few days following Sept. 21.
The combined company’s headquarters will be in Bass Pro’s home of Springfield, Missouri.
Job cuts are likely coming down the pike — something Cabela’s employees and residents of Sidney have been worried about since Bass Pro announced about a year ago that it would buy Cabela’s.
“There will be people losing their jobs, because part of the way that Bass Pro is going to pay for this deal is by reducing expenses,” said Jim Zipursky, an investment banking adviser for midsize companies with Corporate Finance Associates in Omaha. Job losses typically come when two competing companies merge, he said.
At its height, Cabela’s had employed around 2,000 people in Sidney, a town about six hours west of Omaha.
Employees at the store level are the most likely to keep their jobs, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business who focuses on mergers and acquisitions.
Those in administrative functions in Sidney are most at risk, he said. The merged company won’t need two legal, information technology, finance or human resources departments, for example.
And because Bass Pro is a private company that doesn’t trade on a public exchange, it won’t need an investor relations department or many of the regulatory employees needed to run a publicly traded company, as Cabela’s is.
Job cuts probably won’t happen immediately, he said.
“The company will need a transition period to keep things running, but the long-term outlook isn’t good for people in those functions,” Gordon said.
Bass Pro founder and Chief Executive Johnny Morris has told employees that he expects to maintain “significant” operations in Sidney, but he hasn’t detailed what functions will remain. And in a recording The World-Herald obtained of a meeting at Cabela’s headquarters last year, he said he could not make false promises: There would be job cuts, he said.
In a statement to The World-Herald last week, Morris said the final regulatory approval for the deal, which came down on Wednesday, was “an important day for our company, the outdoor community and for conservation.” He said Bass Pro looked forward to completing the purchase later this month.
The Federal Reserve last week announced its approval of the sale of Cabela’s bank. It was the final regulatory go-ahead needed before Bass Pro Shops can buy Cabela’s retail business.
In his statement to the newspaper, Morris didn’t give details on the company’s plan for Cabela’s workforce or its retail store footprint.
Cabela’s declined to comment for this story.
Changes could come as soon as 90 days out from closing, said Zipursky, the Omaha investment banker.
As the acquiring company, Bass Pro’s employees will have an advantage, said Gordon, the Michigan professor. But star employees at Cabela’s may have a chance of staying on, and even possibly being promoted, he said. They could also be offered new jobs at Bass headquarters in Missouri.
Cabela’s already has downsized since the deal was announced a year ago. The company laid off 70 people in March, according to a notice filed with the Nebraska Department of Labor. It’s also likely that with uncertainty looming, some people already have moved on and found new jobs.
“Some of the good people will have left already, and the reduction won’t be quite as major. But it will still be felt,” Zipursky said.
Cabela’s employees and Sidney have been riding a wave of uncertainty for nearly two years. It started with Elliott Management, a New York hedge fund that purchased a large stake in Cabela’s in October 2015 and then said it would push for changes, such as selling the company or breaking it up.
Roughly a year ago, Bass Pro announced it would buy Cabela’s, its top competitor. Then came almost a year of more waiting, and more uncertainty, as the deal was restructured and faced regulatory rigor from the Federal Trade Commission and the Federal Reserve.
In the meantime, state and local economic development leaders have been working to recruit new businesses to Sidney and to convince Bass Pro that there is value in keeping some operations there.
Lukjan Metal Products, a sheet-metal manufacturing plant, expanded to Sidney and took over a vacant building formerly occupied by a wiring plant that closed. Sandhills Publishing also opened an office in the town in a building that once housed a Cabela’s call center.
Melissa Norgard, Sidney’s economic development director, said on Friday that she hadn’t had “any interaction” with Bass Pro Chief Executive Morris. She declined to comment further. She started her job in the spring. Sidney City Manager Ed Sadler did not return a phone message left with his secretary.
Gov. Pete Ricketts met with Morris in June, according to Taylor Gage, the governor’s spokesman. He’d also spoken with Morris last fall. The State Department of Economic Development also has been in “regular contact” with the Missouri retailer, Gage said.
The sensitivity of the situation, and the importance of Cabela’s to Sidney, likely is not lost on Bass Pro executives. Discussions of what might happen to Sidney if Bass Pro were the buyer even came up in the Cabela’s board room as it considered various offers, according to filings with the Securities and Exchange Commission. Bass Pro also included a nod to Sidney in its initial press release announcing the deal.
That could lead the company to handle things a little differently from the way it might otherwise. Bass Pro being a private company means it won’t be under the same pressure to meet quarterly earnings targets and cut costs to please investors, said Rob Berick, senior vice president and managing director of Falls Communications, a public and investor relations company in Cleveland.
Still, sometimes with job cuts, it’s better to rip the proverbial bandage off than it is to try to hide any mass layoffs by letting departments go in a slow trickle, Berick said.
“While a significant workforce reduction comes with the shocking headline, in some ways it’s better for the entire organization, because you don’t have then folks wondering ‘When’s the next round?’ ” Berick said.
Bass Pro and Cabela’s also have a similar company culture, Berick said, with nearly identical founding stories and founders still involved with each company. That could provide some comfort for Cabela’s employees.
“They’re sort of cut from the same cloth,” Berick said. “That to me would suggest Bass Pro is not going to shy away from making hard decisions, but it’s going to be the behavior after the hard decision is made that you’re going to see their true character and see that they have the right intentions.”
Whatever the case, Bass Pro has had the past year to come up with a plan on what will happen in the first 100 days after the sale closes, Zipursky said.
Sidney might not have to wait much longer to find out what’s next.