This morning Six Flags and Cedar Fair announced their intent to merge. This came from the anonymous sources last night that the Wall Street Journal and Reuters cited that said the two companies were in talks to merge.
This news came as the two parks also announced their Q3 results. To read the full press release, check out their site here.
I talked about this in a blog post last night but I’ll catch everyone up to speed again in this post.
Cedar Fair has had a history of other parks attempting to buy it out. Back in 2019, Six Flags attempted to buy the chain(not merge) for $4 billion. Talks eventually fell through and this deal never happened. But then in 2022, Sea World offered to buy Cedar Fair for $3.4 billion. Once again, this deal never happened.
Now Six Flags and Cedar Fair have announced a merger as equals(basically). Cedar Fair stock holders will own approximately 51.2% in the new company while Six Flags stockholders will own 48.8%. In terms of stock, 1 share of Cedar Fair stock will equal 1 unit of this new entity stock. But 1 unit of Six Flags stock will only equal 0.58 shares of stock of the new entity.
So what’s the difference between this merger and a buy out? A merger combines the two companies together to form a new legal entity. A buyout would be a complete purchase of one company by another. This merger would save the companies some cash as Six Flags wouldn’t have to shell out the $4 billion price tag for Cedar Fair that Six Flags once offered back in 2019.
The new legal entity will retain the name Six Flags but use the ‘Fun’ stock ticker of Cedar Fair. This merge is expected to be completed in the first half of 2024 but will require Six Flags shareholder approval, as well as regulatory approval. However, one large shareholder of Six Flags(who owns 13.6% of the stock) has already agreed to this merger. It would take a large amount of shareholders banding together to stop this deal from happening.
What do both companies hope to gain from this?
They will have a lot more IP to work with as Six Flags uses Looney Tunes and DC IP while Cedar Fair uses PEANUTS. The new company will have 27 amusement parks, 15 water parks, and 9 resort properties!
The official headquarters of this new entity will be in Charlotte, North Carolina but will retain some offices in Sandusky Ohio.
Consumers are cutting back their spending as of late due to inflation and the economy in general. This merger would put the new company in a better position to wait out economic uncertainty and reduced consumer spending until it bounces back.
According to estimates, this merger will save the company $200 million over the next two years in cost savings. It will also generate $3.4 billion in revenue per year.