Sportsman’s Warehouse Pops 37% On Great American Buyout Deal; Street Says Buy

Shares of Sportsman’s Warehouse popped 37% in Monday’s extended market trading after the outdoor gear and clothing retailer agreed to be acquired by the privately-held Great American Outdoors Group.

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As part of the merger deal, Great American Outdoors has offered to pay $18 per share in cash to buy Sportsman’s Warehouse (SPWH). The purchase price represents a 42% premium to the stock’s closing price of $12.65 on Monday. The transaction is not subject to any financing condition, the companies said.

The merger agreement has already been unanimously approved by Sportsman’s Warehouse’s Board of Directors. The deal is expected to close in the second half of 2021, pending the approval by Sportsman’s Warehouse’s shareholders, as well as regulatory approvals.

Sportsman’s Warehouse said that as a result of joining up with Great American Outdoors, the parent company of Bass Pro Shops, Cabela’s, and the White River Marine Group, customers will be offered the group’s low-price policy, which guarantees the lowest everyday price on its full assortment, and promises to match or beat any qualified competing offers in store or online.

“This merger brings together the greatest brands in the outdoor industry. As we look to the future, the combined entities provide our passionate associates with greater opportunities to serve the outdoor enthusiast,” said Sportsman’s Warehouse CEO Jon Barker. “I couldn’t be more proud of the nearly 8,000 Sportsman’s Warehouse associates and their success in building our brand over the last 33 years.”

Based in Utah, Sportsman’s Warehouse operates 110 retail locations. The chain specializes in outdoor gear and clothing, for a clientele involved in camping, fishing, hunting, and shooting.

SPWH shares have already served investors well this year. The stock is up about 56% on a year-to-date basis, but analysts have set their bets higher, and see room for continued growth. The average price target of $20.75 implies another promising 64% upside potential lies ahead over the coming 12 months.

What’s more, with 3 Buy ratings, the Strong Buy analyst consensus outlook on SPWH is unanimous. (See Sportsman’s Warehouse stock analysis on TipRanks)

Earlier this month, Lake Street analyst Mark Smith lifted the stock’s price target to $23.50 from $22 and reiterated a Buy rating, citing the company’s third quarter sales and earnings results that beat his estimates and consensus forecasts.

Smith was enthusiastic about demand for the company’s products and market share wins, which led to same-store-sales growth of 40.9%.