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.
Starliner was moved from Panama City to Cypress Gardens (but later was closed again).
Zippin Pippin was moved from the defunct Libertyland and moved to Green Bay Wisconsin.
So it has happened, but it seems very situational. Cedar Fair sold The Villain for scrap at Geauga Lake and it was only 8 years old.
Coasterbuzz - Coaster enthusiasts, but so much more. We're the good ones.
Skyliner at Lakemont started life at the now-defunct Roseland in Canandaigua, NY.
Arkansas Twister was moved from Boardwalk and Baseball.
Wildcat at Frontier City came from Kansas City’s Fairyland.
Lesourdsville Lake’s Cyclone/Skyrocket/Screechin’ Eagle moved from Moxahala Park in Zanesville, Ohio. I guess it wound up with quite a different layout though.
Great Escape’s Comet ran wildly along the Lake Erie shore at Crystal Beach, where it had pieces parts from their legendary Cyclone. So maybe technically…
And Maryland’s Wild One was relocated from Paragon Park near Boston.
That’s all I can think of right now, but it seems it happened more often than we realize. And to think of what might’ve been if more defunct parks hadn’t been so quick with the wrecking ball is disheartening. I think specifically of the treasures at Chicago’s Riverview Park and Cleveland’s Euclid Beach, now lost forever.
Canobie Lake’s Yankee Cannonball came from Lakewood park.
2022 Trips: WDW, Sea World San Diego & Orlando, CP, KI, BGW, Bay Beach, Canobie Lake, Universal Orlando
If Goldstriker was a hybrid GCI it would definitely get moved. It is also on mostly flat land.
Also considering it has all the SF parks as options not just CF I think it could be possible.
If you're referring to SoB, I gotta say they gave it every chance to succeed, it got plenty of track work over the years to try to minimize abuse, but it never lasted.
That led to the main problem, in the last years of its life, pretty much no one would ride it. Empty queues when papa has 30+ min wait. I recall riding half-empty trains on busy days. None of my friends would ride it with me. I actually enjoyed a ride or two per visit but I even admit it had to go.
Just sad that RMC wasn't a thing in 2010. What could have been..
Back to my point, current KI takes care of the woodies quite well... MT is still smooth as can be, both Racers received significant new track, along with GG's work on the Beast. Beyond that, I notice they're re-greasing all track periodically throughout the year, Racer got a spiffy paint job for its 50th, all trains are operational every day, etc.
Don't get me wrong I love wooden roller coasters. It is my favorite type of roller coasters. And I love RMC! They do a fantastic job at whatever they put their hands on! I think the traditionnal wooden coaster is a dying breed, mostly for maintenance reasons. Of course if well designed, like most of the new one nowadays, they are comfortable and enjoyable, but they eventually get rough and it comes down to the park's maintenance departement on how they age well. With RMC's Arie Force One, an all steel coaster in the style of a wooden one, I can easily think they could be the future. I mean if I owned a park and was looking to add a wooden coaster type, I would probably go for that all steel RMC. No one can say they are bad and in the long run, maintenance is most likely easier.
Man, am I ever late to this party!
Just thought I'd mention that the Six Flags brand is really only a tarnished brand in Cedar Fair markets. A number of years ago, I made my first (and so far only) visit to Great Adventure, and generally had a pretty good time. Then I went to Dorney and found that I enjoyed it more. But that's not because Great Adventure was bad, it's just that Dorney was better. Yes, there are places where Premier kind of ruined the Six Flags brand, but in such a way that I think the damage was somewhat limited. Overall it's going to be easier to rehabilitate the Six Flags brand than it would be to establish the Cedar Fair brand.
Personally, I think we might even see the Six Flags brand removed from a park or two as the company decides which parks are best operated as Six Flags, and which are best operated as regional brands of their own. And unlike the way Six Flags did it, I don't think it will necessarily be a "good/better/best" split between Six Flags branded parks and regionally branded parks; especially since we know that their target is to make all of their properties "better" or "best".
The real challenge, of course, is for all of the parks to make me want to spend my money there. Which, of late, none of them have been doing. The value simply isn't there, and so far the Great Cashless Experiment has proven to me to be a giant pain in the neck (and the reason my personal food per-cap at Cedar Point in 2022 was actually negative) as well as destroying casual game play...
--Dave Althoff, Jr.
/X\ _ *** Respect rides. They do not respect you. ***
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Come along, Dave. Cash has gone the way of your Apple ][. 🙂
Jeff - Editor - CoasterBuzz.com - My Blog
When our banking system collapses, my biggest problem is that I will quickly be made into soup. I’m probably not going to worry about how I can pay for the food at a Cedar Point which will probably not be operating.
Credit/Debt is very profitable for the banks, but cash is still king. I kind of enjoy the shorter lines at the theme park shops now. I do wonder if they would save/make more money by accepting cash and hiring a few more cashiers instead.
-Travis
www.youtube.com/TSVisits
Having worked at cash control at CP one season, which used to require 20-30 people in the early 2000's, then every merch store and food stand, had to check in and get an ammo box with change in the am, and return with cash at night. All had to be scanned in and logged.
Then there were the arcades. Which is another long ass story.
But I can guarantee you they are saving a mint inn labor and time, esp with how cheap card readers are and etc. Also with food and alcohol, being big $$$ way more now at CF parks. Just tapping and putting on either your card or debit, means you can quickly go over your budget, and spend way more.
Solar storms have the potential to do a lot more than collapse the banking system. Amusement parks being open would likely be far down the list of concerns.
Expect the benefits of going cashless far outweigh any costs for the parks. May not be true for individual guests though. But that is often the case with changes in policy.
That, and how do you think money "moves" between banks? Why don't we go back to riding horses, slavery, and a world without vaccines, while we're at it?
Jeff - Editor - CoasterBuzz.com - My Blog
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