Cabelas Inc (NYSE:CAB) Shares drop more than 5% on antitrust concerns, What should investors do?

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Cabelas Inc (NYSE:CAB) Shares drop more than 5% on antitrust concerns, What should investors do?

Shares of Cabelas Inc (NYSE:CAB) dropped more than five percent around noon on Friday following reports of concerns on getting approval from anti-trust regulator. The company is in the process of being acquired by privately held Bass Pro Shops. Investors reaction came after the Federal Trade Commission sought additional information on the deal.

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According to the plan announced in October by Cabelas, Capital One Financial Corp (NYSE:COF) would have to acquire credit card business from the company. However, the financial firm told Cabelas that it might get permission for buying the credit card business. This delays the transaction to be closed in the first six month of next year.

However, Cabela indicated that it continued to expect getting antitrust approval for the transaction. The company indicated that it was exploring other alternative means to enable both the deal to close.

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Reacting to the developments, S&P Capital IQ analyst, Levy, said that Cabelas got a second request from the anti-trust regulator. Though there could be concerns on antitrust issues, he said that the FTC seeking information does not necessarily mean that the transaction would be cancelled.

In a research note to clients, the brokerage viewed, “In addition, based on a filing by the parent company of Capital One, there are issues with obtaining certain banking regulatory approvals needed for the merger to close by the original target of H1 ’17. We still see consummation as likely.”

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Therefore, the analyst maintained Hold rating on Cabelas shares. He has a 12-month price target of $66 on the company’s shares.