Capital One Financial Corporation (COF - Analyst Report) has entered into a definitive agreement to acquire the credit card operations from Cabela's Incorporated (CAB - Analyst Report) . This acquisition will include about $5.2 billion in credit card receivables and other assets, and around $5 billion in related funding liabilities.
Notably, the credit card operations will be obtained for par value of the credit card receivables, less the par value of assumed liabilities.
Further, Capital One has entered into a 10-year program agreement under which Capital One will become the exclusive issuing partner of co-branded credit cards, to customers of Cabela's.
The Cabela’s credit card program transaction, along with the acquisition of the credit card operations, is anticipated to close in the first half of 2017. However, this transaction is subject to the closing of Bass Pro Shops' proposed acquisition of Cabela's, regulatory approvals and fulfillment of other customary closing conditions as well.
Rationale Behind the Acquisition
Capital One anticipates that the partnership with Cabela’s will provide it with a strong platform for future growth and returns in its Partnership credit card business.
Jimmy Cannon – Executive Vice President – Card Partnerships at Capital One, said “This partnership is an appealing strategic and financial opportunity, and plays to our strengths in the retail card partnership space. Brand loyalty has been a hallmark for both Bass Pro Shops and Cabela's and, together, we are looking forward to building on the strength of those relationships by providing customers with a rewarding experience."
Notably, the acquisition of Cabela’s credit card operations is not expected to impact Capital One’s capital distribution plan, which was detailed in the company’s quarterly report, for the period ended Jun 30, 2016.
Currently, Capital One carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
A couple of the better-ranked stocks in the finance space include Yintech Investment Holdings Ltd. (YIN - Snapshot Report) and Itaú Unibanco Holding S.A. (ITUB - Analyst Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus estimate for Yintech Investment Holdings has surged 32.1% over the past 60 days for 2016. Also, the shares of the company have gained nearly 32% over the past three months.
Shares of Itaú Unibanco have gained nearly 24% over the past three months. Further, the Zacks Consensus Estimate has increased 18.3% over the past 60 days for 2016.
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