Cedar Fair and Six Flags announce equal merger

I'm not excited about this at all. The whole thing reads as a financial transaction, and nothing more.

Interesting that they'll retain the Six Flags name. It doesn't say that they'll rebrand the parks with the name, and hopefully they won't. I don't think they understand how much brand damage that there is with that name. It's the butt of jokes on late night TV.

https://www.youtube.com/watch?v=L1SV9XScJPg

I’m not at all a fan of this. This is a near complete consolidation of regional theme parks in this country outside of Florida, Texas and California and the handful of independent operators in other markets. I also can’t believe the combined company is keeping the toxic name (Six Flags) that most of us view negatively and fear it’s a sign that the company wants to turn Cedar Fair into Six Flags not the other way around. I have no doubt that Six Flags shareholders will approve this (seeing as they highlight the largest shareholder approving this) but I wonder if CF stockholders will approve. I highly doubt the Knott family wants to be in a company where their park will play second fiddle in the company in their local market and I seem to remember they still hold a significant portion of CF stock. I hope that I’m wrong about this merger, or somehow shareholders or the govt prevent this from happening.

Interesting that CF unit holders don’t get a voice in this, Zimmerman knows they wouldn’t support this and would have voted it down. He’s a total disaster as CEO and this proves it. Now we understand why Ouimet bailed out.

Worst news ever and I’m concerned for the future of Cedar Point.

I suppose a lot could still derail the deal. Six Flags shareholders will probably approve given the market reaction when the WSJ report came out, though pre-market activity (at this instant) seems pretty neutral. The institutional investors would have to ban together to protest. It's weird that Cedar Fair unit holders don't get a say, which I assume is because the company is an LP, but I wonder if an Apollo-style mutiny could happen. Remember, the company was almost sold during that fiasco.

Despite the stock swap ratios, it still feels like Cedar Fair holders don't get as good of a deal. The SIX market cap isn't that far behind FUN, but even despite today's results (which feel negative to me), at least FUN makes money. SIX has more debt on less revenue.

If this means X2 will actually be open when I go in the future, I'm all for this.

Feels like this is primarily just serving to further cut operating costs. At a time when cost cutting has already been off the charts. Internally, this is not giving good feelings.

If this does go through, I wonder what parks will need to be put up for sale. I mean, there isn’t really a comparison of a company that owns this many parks nationwide. Like…will Cedar Flags be able to keep two Ohio parks?

Knotts-SFMM, CGA-SFDK, Dorney-SFGAdv, KD-SFA are all same market off the top of my head. They would be the properties at risk.

“The combination of Six Flags and Cedar Fair will redefine our guests’ amusement park experience as we combine the best of both companies,”

And delete the rest?

In Cedar Fair partnership agreement:

Without the prior approval of Partners whose aggregate Percentage Interest constitutes at least 66 2/3% of the aggregate Percentage Interest of the Partners, the General Partner shall not approve a transaction or a series of related transactions which (i) results in a Change of Control, or (ii) results in the sale or exchange of all or substantially all of the assets of Cedar Point Park.

“Change in Control” shall be deemed to occur if: (a) any person or group (as such term is defined in section 13(d)(3) of the Securities Exchange Act of 1934, as then in effect), other than the Partnership or any trustee or other fiduciary holding securities under an employee benefit plan of the Partnership, shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as then in effect) of more than twenty percent (20%), on a fully diluted basis, of the economic or voting interest in the Partnership’s then Outstanding Units, other than the acquisition of Units from the Partnership or by virtue of a merger or consolidation to which the Partnership is a party, (b) a merger or consolidation of the Partnership with any other Person, other than a merger or consolidation that would result in the Units of the Partnership Outstanding immediately prior thereto continuing to represent (either by remaining Outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity or its parent corporation) more than fifty-one percent (51%) of the voting interest of the partnership interests or other voting securities of the Partnership or such surviving or resulting entity outstanding after such merger or consolidation, or (c) the liquidation of the Partnership or an agreement or agreements for the sale or disposition by the Partnership of all or substantially all of the assets of the Partnership.

Sale to Apollo fell under subpart (a) of Change in Control definition. From press release, merger with Six Flags appears to fall within the exception to subpart (b) of that definition.

https://www.sec.gov/Archive...dandre.htm

Jeff:

I don't think they understand how much brand damage that there is with that name. It's the butt of jokes on late night TV.

Honestly, I think this is true because the name is synonymous with theme parks to the average person. No one knows what a Cedar Fair is.

Branding the company as SF brings far more recognition than going the other direction. Hell, I'd argue that the SF brand recognition is part of the value they bring.

On the opposite end of that, there's little value in the Six Flags name being applied to the individually branded Cedar Fair parks. They have the regional recognition that drives their gate and their revenue. They don't really need to be associated with a brand synonymous with theme parks.

Terrible news. I had to check the calendar to see if this was April 1.

bigboy:

On the opposite end of that, there's little value in the Six Flags name being applied to the individually branded Cedar Fair parks.

But there's no harm either.

They have the regional recognition that drives their gate and their revenue.

I agree.

They don't really need to be associated with a brand synonymous with theme parks.

I'd tend to agree again.

But ultimately, as I already mentioned, I think there's no harm (and possibly increased recognition) in operating as something like Six Flags Cedar Point. So...

(and yes, someone is likely to argue that SF sucks as a brand and attaching the name to CF park will only hurt them based on how awful the parks are in comparison...and I'll remember why I rarely participate in the online enthusiast discussion anymore)

Also, given the whole SFWOA/Geauga dealy-o, it's kinda ironic that CP could end up being a SF park.

GoBucks89:

Sale to Apollo fell under subpart (a) of Change in Control definition. From press release, merger with Six Flags appears to fall within the exception to subpart (b) of that definition.

Thanks, when I saw the 51% control in the press release that felt like an odd number other than having a textbook definition of control. I'm honestly surprised the threshold was that low, essentially making a 50/50 merger automatic with no say from major investors.

Lord Gonchar:

No one knows what a Cedar Fair is.

Branding the company as SF brings far more recognition than going the other direction. Hell, I'd argue that the SF brand recognition is part of the value they bring.

You're not wrong about Cedar Fair as a brand, but that's kind of my point. It has no stigma because people don't know what it is. Six Flags is a damaged brand. It's associated with decline in a number of markets, there are always crime stories associated with the parks (I just stopped posting them, because they're not really interesting outside of each local market), and like I said, they're the butt of the jokes. I'm not saying that Universal and Disney aren't made fun of, but Six Flags is closely associated with Wal-Mart quality and white trash vibes.

Three red flags from the new Six Flags:

1. Not knowing what business you are in

“Six Flags and Cedar Fair share a strong cultural alignment, operating philosophy, and steadfast commitment to providing consumers with thrilling experiences."

Anyone who refers to guests as "consumers" doesn't understand the hospitality industry or the experience economy. This is solely about finance, and nothing more.

2. Spewing BS

The portfolio will include diversified experiences for guests including safaris and animal experiences, campgrounds, sports facilities and luxury lounges

"Luxury lounges" - what utter nonsense. This is beyond putting lipstick on a pig; this is putting lipstick on a viral disease. Buyers (and shareholders) beware.

3. "Integration" = magical thinking + cut, cut, cut

Cedar Fair and Six Flags expect the combined company will benefit from the significant value created by total anticipated annual synergies of $200 million. Approximately $120 million of these synergies are expected to be related to identified administrative and operational cost savings, which the companies anticipate realizing within two years following transaction close.

I'd love more detail on this, as it seems astronomically high and unrealistic. Yes, there would be some savings from eliminating administrative redundancies, but I don't see how it cuts down operational expenses - unless they're talking about shuttering parks with market overlap.

Bottom line: It's hard to keep an open mind about this when this is the vision they're pitching.

Lord Gonchar:

But ultimately, as I already mentioned, I think there's no harm (and possibly increased recognition) in operating as something like Six Flags Cedar Point. So...

Cedar Fair under Ouimet and their CMO Kelley Ford did deep years-long analysis into each park brand, the history, their heritage and how it connected/resonated with the market and consumer. Ouimet even shared an anecdote how he wanted to re-brand Knott's Berry Farm to simply "Knott's" but this branding study showed the deep connection the consumers and market have with the history of "the farm" and how critical the "berry farm" piece of it was to the entire Knott's experience. And you saw CF/KBF pivot to really playing up their brand, history, heritage and reimagining and enhancing legacy attractions. And Knott's performance followed with record revenue and attendance years.

The same CMO (Ford) who led that study for every park and resulted in a shift with cap ex, theming, entertainment, strategy, marketing/brand etc. for all of their parks is still at Cedar Fair. I'd hope she remembers that and doesn't sanitize or nationalize the brands by adding Six Flags.

I think there is very little value in attaching the Six Flags name to any Cedar Fair park. Hell, the current Six Flags CEO was trying to shed the current Six Flags consumer base. Remember during an earnings call about a year ago he said he wanted SIX to move away from the Wal-Mart customer and towards the Target customer?

Let's not forget Selim Bassoul decimated SIX - both from a financial results perspective and internally. That's the guy that is now going to be the Executive Chairman of Cedar Fair parks.

Really disappointed in Cedar Fair's board - particularly Dan Hanrahan and Scott Olivet - the only two Ouimet era directors left that decided to go along with this. I can't imagine Ouimet had this in mind when he selected Zimmerman as his successor. Once Zimmerman took not even 5 weeks (and before he was even officially CEO) to passover Raffi Kapreylan (Knott's GM and then Regional VP) and Greg Scheid (KI GM and then Regional VP) for the COO role and name his old pal Tim Fisher from the Paramount days after his disastrous run at Village Roadshow as COO (then Fisher fired Scheid to bring in another Paramount guy as RVP in Bob White) - you knew he was going to take the company in a completely different direction from Ouimet. The first 2 years (2018-19) were largely status quo because Ouimet was still Executive Chair but it's been a mess since. The financial results have suffered, the park experience for guests has suffered and the employee experience has suffered.