COF Capital One Financial Corporation

By Austen Hufford 

Federal regulators have raised questions over Bass Pro Shops' $4.5 billion deal to buy fellow outdoor-sports-gear retailer Cabela's Inc., creating hurdles for completion of the acquisition and sending shares of Cabela's lower.

In a regulatory filing Friday, Cabela's said two regulatory approvals for the deal had hit speed bumps.

The Federal Trade Commission requested additional information from Cabela's and Bass Pro Shops earlier this week. The FTC says the vast majority of deals are approved without additional information requests, but Cabela's said the request doesn't mean the agency has concluded the deal presents any anticompetitive concerns.

Bass Pro Shops declined to comment.

Meanwhile, Capital One Financial Corp., which is buying Cabela's credit-card business as part of the deal, also told Cabela's it expects a banking regulator, the Office of the Comptroller of the Currency, to eventually approve the deal -- but not before October, when the parties to the merger can walk away, and well after the companies involved had expected the deal to close.

The OCC said it doesn't comment on specific banks or deals.

Nathan Yates, director of research at Forward View Consulting, said the move by the FTC was unexpected as the market is heavily fragmented. Still, he said there are some areas on a local level that could cause concern as the two companies have stores close to each other.

"We believe that this merger will ultimately be approved," he said. "The only question is whether or not any asset sales will be necessary."

KBW analysts said the news from Capital One indicates a lengthening of the banking deal's process. Capital One said it continues to believe in the value of its relationship with Cabela's and is working to meet its commitments.

Bass Pro Shops, Cabela's and Capital One had said previously they expected both deals to close in the first half of 2017, and the credit-card transaction was contingent on the primary deal closing.

Cabela's said it still expects FTC approval in the first half of the year, but it was exploring alternative structures for the deal to allow for a closing before the October deadline.

A Bass Pro Shops-Cabela's merger would create a national chain with more than 180 locations, roughly 40,000 workers and control of more than 20% of the $50 billion U.S. hunting, camping and fishing market, Stifel analyst Jim Duffy has said.

In its annual filing, Cabela's said its markets are fragmented and competitive but also notes some of the largest competitors, such as Wal-Mart Stores Inc. and Amazon.com Inc., don't compete in many of the product lines it offers.

Shares of Cabela's fell 5.1% to $58.55 Friday, below the deal price of $65.50 a share.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

December 31, 2016 02:48 ET (07:48 GMT)

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