Synovus (SNV)-Cabela's Deal Overcomes A Hurdle To Completion

Recent development in the deal between outdoor goods retailer – Cabela's Incorporated (NYSE:CAB) and Bass Pro Shops – retailer of outdoor gear and apparel is likely to be beneficial for Georgia-based Synovus Financial Corp. (NYSE:SNV) . The Federal Trade Commission’s (FTC) approval for the merger of Cabela’s and Bass Pro Shops, announced in Oct 2016, eliminates a hurdle in the completion of the buyout deal of Cabela’s banking operation – World's Foremost Bank – which issues store-branded credit cards, by Synovus.

Notably, Bass Pro Shops will purchase Cabela’s for $4.2 billion or $61.50 per share.

Synovus turned out to be a potential buyer of the financial unit of Cabela's in Apr 2017. Further, the bank will subsequently resell the credit card portfolio to Virginia-based Capital One Financial Corporation (NYSE:COF) , on the deal’s closure, anticipated in third-quarter 2017, while holding back about $1.2 billion brokered time deposit portfolio. Per the terms, Synovus will get $75 million from Cabela’s and Capital One.

However, the deal is subject to customary regulatory approvals, along with completion of the merger of Cabela’s and Bass Pro Shops.

Conclusion

Synovus’ results were quite decent in the last quarter. We believe that the company’s focus on both organic and inorganic growth, together with cost containment efforts, will gradually pay off and aid bottom-line expansion over the long term. Moreover, completion of the deal will facilitate Synovus with additional liquidity and capital, aiding organic growth, and achievement of expected long-term ROA and efficiency goals.

Synovus’ shares have gained around 9.6% year to date, as against the slight decline recorded by the Zacks categorized Southeast Banks industry.

At present, Synovus carries a Zacks Rank #2 (Buy).

Among other stocks to consider, BOK Financial Corporation (NASDAQ:BOKF) has been witnessing upward estimate revisions for the last 60 days. Year to date, the company’s share price has been up more than 2.7%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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