SeaWorld Entertainment makes unsolicited $3.4 billion bid to buy Cedar Fair

They desperately need to clean up the water ride. It looks terrible. The Antarctica area looks terrible.

Q Investments was vocal against the Apollo deal. Sent letter to unitholders recommending that they vote against it if I recall correctly. Also didn't like Cedar Fair management (who at that point had voted to recommend acceptance of the offer -- we beat that one to death but at least a part of that was because the credit markets were in a rough place and it wasn't sure Cedar Fair would be able to refinance -- a lot of that was happening with different companies at the time). But when the board approved the Apollo deal, the stock price was less than what Apollo was offering to pay. Stock price eventually went above $11.50 purchase price and there was some speculation it would be increased but that never happened.

Q pushed for some changes at Cedar Fair including allowing unitholders to nominate board members. I think 95%+ of the unitholders who voted were in favor (so the vote itself was close to unanimous). But the Cedar Fair org docs require vote of 80% of unitholders for certain changes. From what I have read, Cedar Fair has a number of unitholders who do not vote for anything so many view an 80% vote as being unattainable. Q Investments has since sold much (if not all) their Cedar Fair investment. Not sure if they did that because they wanted to have more influence but didn't think they could get it or if they had made a return that they didn't think would be bettered by holding onto the equity longer.

Not sure what Centerbridge is thinking. Private equity firms are typically look for control acquisitions (where they own enough equity to control the company rather than owning a minority of the equity). But that varies by PE firm. There is a reporting requirement if you acquire more than 5% of the equity of a public company so going public with that may not necessarily mean they intend to buy more. PE firms also typically finance their acquisitions with debt of of the target (leverage buyouts) but Cedar Fair is already leveraged.

By not responding, Cedar Fair gives some inference that they are open to a buyout. If not, they would say thanks but no thanks quickly. Potentially draws in other parties who may be interested or may be looking to profit off a company that at least appears to be in play. You also can have companies in the industry who may look at possible combos and being left without a dance partner if that happens. Not sure there is as much a benefit of combos as some seem to believe. But that doesn't mean it won't happen.

Cedar Fair has an earnings call this week. If we haven't seen an official response before that call, analysts will ask Cedar Fair about it. They can say they are still looking at the offer (and they have been getting through year end reporting/planning and getting ready for the earnings call) but that may just fuel more speculation. Can be shut that down by rejecting the offer outright but if you are evaluating it and looking at a potential counter of some sort you won't reject it.

Time will tell. More certainty if they reject it. Much less so if they move forward with SeaWorld or with another potential purchaser in terms of what that looks like for the parks in the near and long term.

I don't know how often the Cedar Fair board meets, but from the timing of announcements and such it seems that when they do meet, it's usually on Friday. Last Friday was a snow day, so if they were supposed to meet, there is a good chance that they didn't. If they met this Friday, I wouldn't be surprised--if the SEAS offer was discussed and acted on--if we shouldn't expect any announcement until at least Monday. But that's *entirely* speculation on my part.

I figured the Centerbridge announcement was probably a regulatory thing, since they announced that they are at 5%.

In hindsight, I think we can see the Apollo deal for what it was, and why the Board approved of it. It wasn't a buy-out, it was a merger which would take the company private, and would have provided a very nice payout for certain major unitholders who, at the time, were contemplating retirement and could use a very nice payday, especially at a value somewhat above the then-current unit price. Q was right, and as a non-unit-holding customer, I really do appreciate what they did for the company.

Knowing now that Centerbridge has been a unitholder for some time, it is quite possible that the increase in their holdings now is nothing more than taking advantage of the current bump in the unit price for a company whose unit price normally is pretty stable. And when it's all over, sale of no sale, they'll make money off those additional units.

--Dave Althoff, Jr.

That could be the case. We won't know until they say something.

They should be able to call a special meeting if they thought it necessary (not sure if they met via video during Covid but that would make it easier). Presumably they didn't think it was necessary. And when the next meeting was scheduled could play into that determination.

Yeah, I wouldn't limit board meetings to any schedule. They can call extra meetings as necessary.

True, but what's necessary? Sea World Entertainment can wait. Only the media and analysts want them to rush. They didn't ask for an offer, there is certainly a regular meeting or two coming up soon...SEAS can wait, and so can everybody else.

--Dave Althoff, Jr.

I, for one, can't wait. I need my All Season Platinum Flashpass to cut the line for Iron Gwazi before it expires at the end of March.

I would guess the board meets in person for the annual meeting (which is now virtual) and then maybe one other time. I don't think snowstorms in Ohio are affecting when they meet. Also, when there is a public offer to acquire the company, the board isn't going to sit on their hands just waiting for their next scheduled meeting.

I do agree the longer this drags out, it signals the Board and management are willing to listen to proposals. I thought they'd publicly shoot the SeaWorld offer down quickly. I would imagine, CF would need to make some public comment/update prior to (or part of) their earnings release on Wednesday. I'd imagine 75% of the analysts' questions would be about a potential merger or acquisition so going into that call with silence wouldn't make a ton of sense - as this was a publicly disclosed offer vs simply rumors or headlines that CF management can brush off in an earnings call with the basic "we don't comment on speculation etc etc"

https://www.prnewswire.com/news-releases/seaworld-entertainment-inc...83201.html

The offer was rejected, apparently.