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Cedar Fair and Six Flags to Merge, Creating an Amusement Park Giant in North America 2024-04-20 11:38:22

Cedar Fair and Six Flags are merging to create an extensive operator of amusement parks spanning 17 U.S. states and three countries.

The combined company, valued at over $3.5 billion, will have 27 amusement parks, 15 water parks, and nine resort hotels in the United States, Canada, and Mexico. It will also have entertainment partnerships and a portfolio of intellectual property, including Looney Tunes, DC Comics, and Peanuts.

While revenues from amusement parks have increased, they have struggled to boost attendance after the pandemic, even as other entertainment sectors have returned to normal. The merger of these two major players is expected to lead to cost reductions at the very least.

Cedar Fair reported that it had 12.4 million visitors in the third quarter, a 1% increase from the previous year. Six Flags announced a 16% increase in attendance in the third quarter, with 9.3 million visitors.

However, amusement parks, including Six Flags, have had difficulty getting people through the gates, according to James Hardiman of Citi Investment Research.

"While the theme park industry as a whole has been under significant pressure since the onset of the pandemic, Six Flags itself has created additional pressure through an unstable new attendance and pricing strategy, which has sought to take root, alienating its core customer base, and leading to a sharp drop in attendance," Hardiman wrote.

Six Flags and Cedar Fair, which have little geographic overlap, expect to save $120 million within two years of completing the deal.

Six Flags and Cedar Fair had previously discussed potential deals, with Six Flags making an offer for Cedar Fair in 2019, which was rejected. Last year, SeaWorld approached Cedar Fair with an offer, but that proposal was also declined.

Under the agreement announced on Thursday, Cedar Fair unit holders will receive one common share of the combined company for each unit they own, while Six Flags shareholders will receive 0.5800 shares of the combined company for each share they own.

Cedar Fair unit holders will own approximately 51.2% of the combined company, while Six Flags shareholders will own approximately 48.8%.

"Our merger with Six Flags will unite two iconic North American amusement park companies to create a highly diversified operation and a more resilient operating model to enhance the offerings and performance of our parks," said Cedar Fair CEO Richard Zimmerman in a prepared statement.

Zimmerman will become the CEO of the combined company, and Selim Bassoul, CEO of Six Flags, will become the executive chairman.

The companies said that given their broader geographic presence as one entity, seasonal volatility should decrease.

The newly formed company's board will include six directors from Cedar Fair and six directors from Six Flags.

The company's headquarters will be in Charlotte, North Carolina, with significant financial and administrative operations in Sandusky, Ohio, where Cedar Fair is based.

After the deal is completed, the merged company will operate under the name Six Flags and trade under the ticker symbol "FUN" on the New York Stock Exchange.

The deal, approved by the boards of directors of both companies, is expected to close in the first half of next year, subject to approval by Six Flags shareholders.

Shares of Six Flags Entertainment Corp. and Cedar Fair LP were little changed ahead of Thursday's opening, but this week, shares of both companies rose more than 9% after rumors of the deal began circulating.

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