business

After operating less than six years as a publicly traded company, St. Paul-based outdoor retailer Gander Mountain said Monday that its two largest shareholders will take the company private.

Interim CEO David Pratt, a wealthy businessman and outdoors enthusiast who lives near St. Louis, owns about 42 percent of the company through his Gratco company. Bloomington-based Holiday Stationstores, owned by the Erickson family, controls about 28 percent.

Gratco and Holiday will buy out holders of less than 30,000 shares at $5.15 each, a 35 percent premium over Friday's closing price. Holders of more than 30,000 shares will keep their current stakes.

The buyback will cost between $25 million and $30 million, according to a company spokesman, and is expected to be completed by early 2010. It does not require shareholder approval under Minnesota law, the company said in a statement.

Gander stock closed Monday at $5.10, up 33.5 percent. More than 834,311 shares were traded, compared with the average volume of 62,444 shares.

"They've been operating almost like a private company anyway, so it's not very surprising" said Reed Anderson of D.A. Davidson & Co. in Minneapolis, the only analyst still covering Gander, which specializes in the hunting, fishing and camping market.

"It's expensive to be a public company," Anderson said. "You have to report your financials, you have to prepare press releases -- there are all kinds of things that go into it. If you have no need to be a public company, ultimately it's a distraction and an expense."

Company officials declined a request for interviews. Gander said in its statement that the board of directors decided in part that the costs associated with ongoing regulatory requirements of a public company outweighed the benefits to Gander and its shareholders.

Store operations and staffing levels are not expected to be affected by the transaction, Gander spokesman David Ewald said in an e-mail.

Gander operates 116 stores in 23 states, but hasn't seen a profit since 2004. The company has spent the past year trimming overhead costs, and has mostly gotten out of its money-losing venture selling boats and all-terrain vehicles. It reported a wider-than-expected quarterly loss this month from higher advertising costs and its exit from the power sports business.

The stock has traded around $6 for much of the summer, though its two-year average is closer to $4.

Gander Mountain was founded in Wilmot, Wis., in 1960 as a catalog operation. It ran into rocky financial times in the mid-1990s, and ultimately filed for Chapter 11 bankruptcy protection in 1996. Holiday, which at the time had 10 retail sporting goods stores, bought all of Gander's 17 stores in 1996 and 1997. It began operating all the locations under the Gander Mountain banner.

Before bankruptcy, Gander had sold its direct-marketing division and some trademark licenses to rival Cabela's for $35 million. The deal included a seven-year noncompete clause that dogged the Ericksons and the new Gander Mountain for years, as the retailer was unable to create a website or publish a catalog until August 2008.

Pratt, a Gander board member since 2005 and founder of pesticide maker United Industries, sank $50 million into the retailer in December 2006. That cash infusion largely financed Gander's growth in recent years, especially in the South.

Jackie Crosby • 612-673-7335