Cedar Fair and Apollo Merger terminated

Posted | Contributed by Bozman

Cedar Fair Entertainment Company today announced that it and affiliates of Apollo Global Management, a leading global alternative asset manager, have mutually agreed to terminate the previously announced definitive merger agreement.

Consistent with the terms of the agreement, Cedar Fair will pay Apollo $6.5 million to reimburse Apollo for certain expenses incurred in connection with the transaction. In addition, both parties will release each other from all obligations with respect to the proposed merger transaction as well as from any claims arising out of or relating to the merger agreement.

Read the entire press release from Cedar Fair.

Wow, I don't know much about mergers but I'm surprised they didn't try for the vote. Well now we can see what happens next, Q investments it's now your move.

birdhombre's avatar

I'm no big city stock broker {places thumbs under suspenders}, so I can't really decipher the second half of the press release. But is it saying that you will now need to own at least 20% of units in order to have a vote?

$6.5 million gone with no vote to show for it! Sad, now replace Dick.


birdhombre said:
But is it saying that you will now need to own at least 20% of units in order to have a vote?

i haven't read the whole Rights Plan, but, it's a type of poison pill machination.

If some entity starts to control more than 20% of the units, then the "rights" (previously non-existent, and created solely for this purpose, think of them as like additional shares but that have no value), become separable from the shares, and have a value equal to two times the exercise price of the Right. Thus, it takes more effort than just buying or controlling 20% of the shares to take control of the company.

***** From the Rights Plan
If a person or group becomes an Acquiring Person, each holder of a Right will thereafter have the right to receive, upon exercise, Units (or, in certain
circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Right. Notwithstanding any of the foregoing, following the existence of an Acquiring Person, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.


you can still sell your 1, 2, 400, however many shares you have, and you still have the same amount of votes for anything via proxy. The wrinkle comes into play that the rights, (which are now worthless) suddenly have a value (and a cost to an acquirer) if someone (group) tries to take control.

This whole thing absolutely blows my mind.

Not only was it a failure, but they had to pay Apollo?

Seriously, what was Cedar Fair thinking?

john peck's avatar

rathofdoom said:This whole thing absolutely blows my mind.Seriously, what was Cedar Fair thinking?

They thought it was going to work out. It's a lot of money, but it's not uncommon.

...and if you read through the proxy statement, you'll find that much of the negotiation apparently centered on Cedar Fair getting Apollo to settle for a smaller breakup fee if the merger failed...and if they had gone for the vote, I think the fee would have been even larger.

--Dave Althoff, Jr.

    /X\        _      *** Respect rides. They do not respect you. ***
/XXX\ /X\ /X\_ _ /X\__ _ _ _____

"The Rights Plan was not adopted in response to any specific effort to acquire control of the Company, but as an appropriate preventative measure to ensure all unitholders are protected while the board of directors considers next steps."

Ummm, yeah. Uh-huh.

Well, it appears that neither of the large shareholders (Q-II or the other group) has any interest in assuming control of Cedar Fair, except to the extent of preventing the merger with Apollo. I do wonder if the plan had anything to do with preserving certain non-ownership rights of certain other major minority share holders... . . . . . .

--Dave Althoff, Jr.

    /X\        _      *** Respect rides. They do not respect you. ***
/XXX\ /X\ /X\_ _ /X\__ _ _ _____

Glad to see it didn't go through. Too bad they have to pay out 6.5 million.

as for the inverters Stopping the merger is in their best interest. most are investment companies. they can sit on teh shares they own and wait for the company to come back. the companies finances are actually very good and their isn't even a big debt do for 2 years.

Jerry's avatar

I'm not a financial guru - but with this new "rights" clause in place - does it affect someone from attempting to get folks ousted from current management? or petitioning to have the board members replaced?

Fun's avatar

Now that Cedar Fair is going to have to restructure their own debt, I feel even more certain that this will be the final season for Great America.

mlnem4s's avatar

It is going to be a raucous unit-holder meeting come June! I can hear the chants already, "Hey, Hey, Ho, Ho, the CEO has go to GO!!" The board of directors need to start doing their JOB and create some change in corporate management at Cedar Fair; Dick & Co. have become nothing more than a liability at this point, the same way Michael Eisner and his team became a liability at Disney.

I personally am looking forward to the day we can get rid of all the incessant Beach Boys music in the parks too, it is 2010 after all. There has to be other "summer beach themed" music that is more current, isn't there?!

But we'll have fun, fun, fun when the directors take our Kinzel away.

Stock up almost 18% this week. Closes at $14.01 today.

So how high would CF stock have to go before the company was worth more than its debt?

My author website: mgrantroberts.com

I knew I should have bought some stock the day the deal fell apart.

And then one day you find ten years have got behind you
No one told you when to run, you missed the starting gun

FUN stock hit a intraday high of $14.95 yesterday, April 12, 2010.

BTW I like the Beach Boys!!!!!! We'll have FUN FUN FUN when the stock hits a new high. Oh, sorry, that doesn't rhyme.

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