Six Flags is supposedly in talks to merge with Cedar Fair. This is according to Reuters and Wall Street Journal who have heard this from anonymous sources. Will this merger actually happen, what will it mean, and why is it happening now? I’ll discuss that here in this post.
Six Flags has offered to buy out Cedar Fair in the past.
It wasn’t even too long ago, this happened in 2019. They offered a $4 billion dollar unsolicited offer to buy Cedar Fair. Ultimately they never went through with the sale.
Then in 2022, Sea World offered to buy Cedar Fair for $3.4 billion. Cedar Fair also turned down this offer. It’s interesting that they valued the park at $600 million less than it was originally valued back in 2019, this was probably due to the decrease in guest attendance that COVID brought.
So, Cedar Fair has a history of getting offers to be bought out. But in this case, the offer is a merger. What’s the difference? In an acquisition(buying out), one company purchases the other entirely. In a merger, both companies form a new legal entity and join forces as one organization.
What would a merger accomplish for both parks?
It would allow both parks to reduce the number of corporate jobs that operate behind the scenes. This would be a large cost savings. You don’t exactly need two teams of marketing professionals, and could remove one entirely, or just remove a few members of both teams.
It can also be said that having more parks would give the new company significantly more buying power, where it could negotiate better deals with vendors/suppliers to reduce costs now that it has more parks to negotiate with.
They may also consolidate parks that are close to eachother, moving the good rides from a poor performing park to the higher performing park. This would boost the ratings of the higher performing park and increase its attendance even more.
Less competition. Take for example Knott’s Berry Farm and Six Flags Magic Mountain. These two parks are located in Southern California and have been competing against one another for some time. If they were part of the same company, instead of competing, they could help nudge their guests to also visit the other park.
Why is this merger happening now?
Cedar Fair is about to release its earnings report. Usually these acquisitions/mergers are announced when the executive team knows that the earnings report will fall short of expectations. We’ve seen this in the past from companies. It can be guessed that this new earnings report may fall short. Or, in the extreme case, it far far far exceeds expectations and Cedar Fair is using that as a bargaining chip to get more out of this deal.
IAAPA is right around the corner. This world class theme park conference will have this news be the talk of the event if it happens. Although, this probably isn’t a huge reason but it couldve been a small one.
Will this merger happen?
meh, we’ve seen Cedar Fair say no in the past to multiple offers. They could very well do the same here. I don’t give it very high chances of succeeding. Even if they do want to merge, it may undergo FTC disapproval due to having a large monopoly in the theme park market.
Should this merger happen?
No, No, No, No. This merger should not happen. I think the park chains are too different for this merger to succeed. Many see Cedar Fair parks as being of a higher quality than Six Flags parks. Many guests that visit Cedar Fair parks go there for the theming, food, and overall vibe. Many guests that visit Six Flags parks simply go there for the thrills and that it isn’t that expensive.
I would hate for this merger to happen as I would forsee this only hurting Cedar Fair parks and slightly helping Six Flags parks. But, we will see. Apparently, according to these sources, we could be hearing soon if this deal happens or not.
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