Cedar Fair and Six Flags announce equal merger
Posted
From the press release:
SANDUSKY, Ohio & ARLINGTON, Texas--(BUSINESS WIRE)-- Cedar Fair (NYSE: FUN) and Six Flags Entertainment Corporation (NYSE: SIX) today announced that they have entered into a definitive merger agreement to combine in a merger of equals transaction. The combined company, with a pro forma enterprise value of approximately $8 billion based on both companies’ debt and equity values as of October 31, 2023, will be a leading amusement park operator in the highly competitive leisure space with an expanded and diversified footprint, a more robust operating model and a strong revenue and cash flow generation profile.
Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, Cedar Fair unitholders will receive one share of common stock in the new combined company for each unit owned, and Six Flags shareholders will receive 0.5800 (the “Six Flags Exchange Ratio”) shares of common stock in the new combined company for each share owned. Following the close of the transaction, Cedar Fair unitholders will own approximately 51.2%, and Six Flags shareholders will own approximately 48.8%, of the combined company’s fully diluted share capital on a pro forma basis. One business day prior to the close of the transaction, Six Flags will declare a special cash dividend composed of: (i) a fixed amount of $1.00 per outstanding Six Flags share, totaling approximately $85 million in the aggregate, plus, (ii) an amount per outstanding Six Flags share equal to (a) the aggregate per unit distributions declared or paid by Cedar Fair to unitholders with a record date following today’s date and prior to the close of the transaction, multiplied by (b) the Six Flags Exchange Ratio, which special dividend will be payable to Six Flags shareholders of record as of one business day prior to the close of the transaction, contingent on the closing of the transaction.
“Our merger with Six Flags will bring together two of North America’s iconic amusement park companies to establish a highly diversified footprint and a more robust operating model to enhance park offerings and performance,” said Richard Zimmerman, President and Chief Executive Officer of Cedar Fair. “Together, we will have an expanded and complementary portfolio of attractive assets and intellectual property to deliver engaging entertainment experiences for guests. The combination also creates an enhanced financial profile with strong cash flow generation to accelerate investments in our parks to delight our guests, driving increased levels of demand and in-park value and spending. I have great respect for the Six Flags team and look forward to joining forces as we embark on this next chapter together.”
“The combination of Six Flags and Cedar Fair will redefine our guests’ amusement park experience as we combine the best of both companies,” added Selim Bassoul, President and Chief Executive Officer of Six Flags. “Six Flags and Cedar Fair share a strong cultural alignment, operating philosophy, and steadfast commitment to providing consumers with thrilling experiences. By combining our operational models and technology platforms, we expect to accelerate our transformation activities and unlock new potential for our parks. We are excited to unite the Cedar Fair and Six Flags teams to capitalize on the tremendous growth opportunities and operational efficiencies of our combined platform for the benefit of our guests, shareholders, employees, and other stakeholders.”
Compelling Strategic and Financial Benefits
- A Successful Amusement Park Operator with Complementary Portfolio of Attractive Assets: The combined company will operate a portfolio of 27 amusement parks, 15 water parks and 9 resort properties across 17 states in the U.S., Canada, and Mexico. The company’s complementary portfolio will include some of the most iconic parks in North America with significant brand equity and loyal, recurring guest bases within the highly competitive leisure space. The combined company will also have entertainment partnerships and a portfolio of beloved IP such as Looney Tunes, DC Comics and PEANUTS to develop engaging new attractions enabled by compelling characters, environments, and storytelling.
- Diversified Footprint and Guest Experiences: Cedar Fair and Six Flags have minimal market overlap of park operations, and the combined company’s complementary geographic footprint is expected to mitigate the impact of seasonality and reduce earnings volatility through a more balanced presence in year-round operating climates. The portfolio will include diversified experiences for guests including safaris and animal experiences, campgrounds, sports facilities and luxury lounges, enabling the combined company to better meet rising consumer demand for varied and engaging entertainment options.
- Enhanced Operating Platform to Improve Guest Experiences: By uniting Cedar Fair and Six Flags’ complementary operating capabilities, the combined company will benefit from a more robust operating platform for improved park offerings and more efficient systemwide performance. The companies expect to leverage Cedar Fair’s recent park investment experience to accelerate the transformation underway across Six Flags’ portfolio. Cedar Fair and Six Flags will seek to create a more engaging and immersive guest experience. The combined company will also offer expanded park access to season pass holders along with an enhanced, combined loyalty program featuring additional perks.
- Experienced and Proven Leadership Team: The senior leadership teams of Six Flags and Cedar Fair bring different and complementary skillsets and experience to the combined company, including decades of park operating experience as well as significant expertise integrating businesses and achieving synergy targets.
- Significant Cost Savings and Revenue Uplift Opportunity: Following the close of the transaction, 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. The companies also expect to leverage their complementary operating capabilities to deliver additional revenue uplift, generating approximately $80 million of incremental EBITDA that the companies anticipate realizing within three years of transaction close.
- Strong Financial Profile: Over the last 12 months, through the third quarter of fiscal 2023, Six Flags and Cedar Fair collectively entertained 48 million guests, and, as a combined company, would generate pro forma $3.4 billion1 in revenue, $1.2 billion1 in Adjusted EBITDA2, and $826 million1,3 of free cash flow4, reflecting run rate cost savings of $120 million and revenue uplift resulting in $80 million of incremental EBITDA. The transaction is expected to be accretive to earnings per share for Cedar Fair unitholders and Six Flags shareholders within the first 12 months following transaction close. The combined company is also expected to have a pro forma leverage ratio of approximately 3.7x net debt to Adjusted EBITDA, inclusive of synergies, with a path to reduce the leverage ratio to approximately 3.0x within two years of transaction close.
- Significant Free Cash Flow Generation and Enhanced Financial Flexibility: The combined company’s increased free cash flow will provide it with greater flexibility to invest in new rides and attractions, broader food and beverage selections, additional in-park offerings, and cross-park initiatives, such as consumer technology and enhanced guest services. The combined company’s resources are expected to be strategically deployed to grow attendance, increase per capita spending, and improve profitability, all while enhancing guests’ value and experience across the park portfolio. The combined company is committed to allocating capital to maximize shareholder returns once the company achieves its targeted net leverage ratio.
Leadership, Corporate Governance and Headquarters
The combined company will be led by a proven management team that reflects the strengths and capabilities of both organizations. Upon closing of the transaction, Richard Zimmerman, President and Chief Executive Officer of Cedar Fair, will serve as President and Chief Executive Officer of the combined company and Selim Bassoul, President and Chief Executive Officer of Six Flags, will serve as Executive Chairman of the combined company’s Board of Directors. Brian Witherow, Chief Financial Officer of Cedar Fair, will serve as Chief Financial Officer of the combined company and Gary Mick, CFO of Six Flags, will serve as Chief Integration Officer of the combined company.
Following closing of the transaction, the newly formed Board of Directors of the combined company will consist of 12 directors, six from the Cedar Fair Board and six from the Six Flags Board.
Upon closing of the transaction, the combined company will operate under the name Six Flags and trade under the ticker symbol FUN on the NYSE and will be structured as a C Corporation. The combined company will be headquartered in Charlotte, North Carolina, and will maintain significant finance and administrative operations in Sandusky, Ohio.
Approvals and Closing
The merger is expected to close in the first half of 2024, following receipt of Six Flags shareholder approval, regulatory approvals, and satisfaction of customary closing conditions. Approval by Cedar Fair unitholders is not required. Six Flags’ largest shareholder, which owns approximately 13.6% of Six Flags’ shares outstanding, has signed a voting and support agreement to vote in favor of the transaction. The transaction is not expected to trigger any change of control provision under Cedar Fair’s and Six Flags’ respective outstanding Notes. The companies expect to refinance their respective revolving credit facilities, and Six Flags expects to refinance the Six Flags Term Loan, ahead of transaction close.
Cedar Fair and Six Flags Third Quarter 2023 Results
In separate press releases today, Cedar Fair and Six Flags reported results for the third quarter of fiscal year 2023. The Cedar Fair release is available at https://ir.cedarfair.com and the Six Flags release can be found at https://investors.sixflags.com.
Advisors
Perella Weinberg Partners is serving as exclusive financial advisor and Weil, Gotshal & Manges LLP and Squire Patton Boggs (US) LLP are serving as legal counsel to Cedar Fair. Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Kirkland & Ellis LLP is serving as legal counsel to Six Flags.
Personal experience, I do not enjoy my visits there, so I stopped going. With one notable exception: SFFT which is great, thanks to its GM.
2022 Trips: WDW, Sea World San Diego & Orlando, CP, KI, BGW, Bay Beach, Canobie Lake, Universal Orlando
Your personal experience isn't proof they have a bad rep.
Jeff:
but Six Flags is closely associated with Wal-Mart quality and white trash vibes
Please, you are doing Wal-Mart a disservice. I think Six Flags is more associated with Dollar General.
Steve Shives
First Cedar Point visit - 1972
SF-Walmart
CF-Target
SEAS-Macys
Hershunds-Bass Proshop
Universal/Disney:Louis Viteon
2022 Trips: WDW, Sea World San Diego & Orlando, CP, KI, BGW, Bay Beach, Canobie Lake, Universal Orlando
Touchdown:
SFFT which is great, thanks to its GM.
No disrespect to him, but I'll never get the gushing people have over a park GM.. The park itself is fine, but honestly, it felt like any other SF park to me in a somewhat unique location I guess (but still plenty of blacktop and a lack of shade, plus one of them horrid S&S freespins!). Operation, food, ride collection, etc... It's all the same as any other. It's just interesting that people bring up the GM so much when talking about why they like this particular park so much.
“Louis Vuitton” :)
I’m going to the gravesite of George Boeckling in Sandusky to hold a seance in order to put a curse on this deal. It’s time to call out the big guns to stop this travesty! 😂
SteveWoA:
No disrespect to him, but I'll never get the gushing people have over a park GM.
If you knew him and have seen how his park is run, I suspect you'd feel differently.
Jeff - Editor - CoasterBuzz.com - My Blog
Tekwardo:
Everyone always says Six Flags has a bad reputation without ever backing that up.
I'd love to to see some actual bad reputation links.
The Six Flags CEO publicly stated Six Flags parks attract "a Wal-Mart level type of consumer" and he was trying to refresh and upgrade the parks to attract "a Target level type of consumer"
That was the CEO himself saying that in a public earnings call.
Reputation of alleged type of customer vs reputation of company are very different things.
I mean...we think of Walmart being a certain way because of the alleged type of customer. Walmart itself isn't trashy, but the customer base is seen as that...therefore people associate Walmart with trashy people and consider Walmart trashy. Those two things aren't disconnected.
But again? Can I see some actual proof that people outside of thoosie circles think SF had a bad reputation?
Anecdotes and comparisons that aren't really apt doesn't mean that the brand is tarnished.
Tekwardo:
But again? Can I see some actual proof that people outside of thoosie circles think SF had a bad reputation?
Anecdotes and comparisons that aren't really apt doesn't mean that the brand is tarnished.
Brands attract certain types of consumers based on the brand's reputation and level of service.
The Ritz Carlton hotel brand has a different reputation and level of service so will attract a different consumer than Econo Lodge.
The Six Flags CEO himself said the Six Flags brand attracted "Wal-Mart level consumers" and he wanted to revitalize and enhance the parks and brand to be able to attract a "Target level consumer". Six Flags is not attracting the Target level consumer because of their reputation, quality and service.
The CEO himself is saying that publicly. That isn't an anecdote. That was the company's entire strategy shift.
Hoping that is enough "proof" for you.
The CEO saying they'd like to attract more affluent people doesn't mean the parks have a bad rep.
It just doesn't.
No matter how much yall want to believe what you say is true. The CEO has said a lot in his time and not all of it was based in reality. I remember countless conversations about things he's said and done since taking over.
Regardless, Six Flags isn't a brand that people avoid. If you think so, go touch grass. And they're not going to rebrand SF parks because they're trying to go for another demographic.
Walmart's brand is so toxic that they made how much last year?
doesn't mean the parks have a bad rep....
I'm pretty sure his comments come from a guess survey they conducted when he took over, also last year they lost 7 million in attendance...
All you have to do is visit more than 3 of them... and it's pretty clear
• Rides not painted since who knows when the best ride at the park and not even a bad SF park (Nitro)
• Whole sections of parks shutdown that were once well-themed (SF:A and others)
• Operations that are passable or abysmal
• Cloned rides, landed in parking lots, with little to terrible landscaping.
• Cheap DC-themed flats landed willy-nilly
• Food options are worse than most county fairs and prices nearly double
• Closed food stands, run-down, and nowhere near CF clean.
• Lots of teenagers without parents and a clear discount tix crowd
I don't know anyone who gets out to more than their local amusement park and thinks that Six Flags provides a quality guest experience.
Equating amusement parks to grocery stores is silly anyway. Leisure is a whole different industry than groceries. Groceries are a necessity so people are going to shop somewhere that's convenient to them and try to save money in the process, customer service be damned. In fact, I go out of my way to visit a Walmart because I know I can get a better selection and lower prices than Gian Iggle.
Leisure is different. I have limited funds, limited time, and thus want to spend my limited resources somewhere that I know that I'll get the best experience. I don't go out of my way to visit a Six Flags park unless it's during CoasterCon when they put out their best presentation for us. I do go out of my way to visit Cedar Fair parks. I drive from Pittsburgh to visit Cedar Point, Kings Island, and Kings Dominion every year, but don't do the same for Darien Lake or Six Flags America. (Yeah, I get that CP and KI are better parks in general, but I'd be willing to visit SF for variety if they were run better.)
Tekwardo:
Regardless, Six Flags isn't a brand that people avoid.
They kinda did in 2022.
Tekwardo:
The CEO saying they'd like to attract more affluent people doesn't mean the parks have a bad rep.
I think you're playing semantic games. This will come off classist and uppity, but the general behavior of customers and quality of product is strongly correlated with cost. If I can give the CEO any kudos, it's that he appears self aware on this issue.
If you're asking for NPS scores on Six Flags, and I assure you that they exist, they're gonna be low for many of the parks. But we're never going to see them unless they're something to brag about.
I've been scanning news headlines for two decades, and even prior to today, it's story after story about people getting beat up in the parking lot, or drunk people getting arrested or whatever. The press isn't exactly lining top 10 lists with SF parks.
Jeff - Editor - CoasterBuzz.com - My Blog
Many of us from NE Ohio have fond memories of Geauga Lake. But, the reality is, we had a Six Flags crowd. It was the lower priced alternative to Cedar Point and we had our share of youth fights...and even a Grad Night shooting outside the Main Gate one year.
But, I've seen some Six Flags behavior at the Disney parks from time to time. Nobody is immune to it...but it does happen more frequently at the Regional Parks...and Six Flags gets more than their fair share likely because of the accessible price point.
"You can dream, create, design, and build the most wonderful place in the world...but it requires people to make the dreams a reality." -Walt Disney
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