The companies say a combined company will be “a leading amusement park operator in the highly competitive leisure space with an expanded and diversified footprint, a stronger operating model, and a strong revenue and cash flow generation profile,” according to a news release. The combined company will have a pro forma enterprise value of about $8 billion based on both companies’ debt and equity values as of Oct. 31. It will operate 27 amusement parks, 15 water parks, and nine resort properties in 17 states and three countries, including the United States, Mexico, and Canada.
The deal is expected to accrue to earnings per share within the first 12 months of 2024, the companies said. Cedar Fair unitholders will receive one share of the new company for each unit, and Six Flags shareholders will get 0.58 shares of the combined company for each of their shares. The transaction is expected to close early next year and will be subject to approval by both the board of directors of each company and by shareholders of both companies.
Both companies are under pressure from a slowdown in the economy and consumers curbing discretionary spending, which has hurt their stock performance this year. A tie-up is expected to help them weather a stricter environment and better compete against rivals like SeaWorld Entertainment (SEAS.N) and Disney’s theme parks.
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Shares of both Cedar Fair and Six Flags rose more than 6% in afternoon trading on Thursday. The combined company will be headquartered in Charlotte, North Carolina, retaining significant finance and administrative operations in Sandusky, Ohio. Cedar Fair CEO Richard Zimmerman will be the chief executive of the new company, and Six Flags President and Chief Executive Officer Selim Bassoul will become executive chairman of the combined board of directors.
The combined company will be a public company with the ticker symbol FUN on the New York Stock Exchange and will remain a C corporation. It will also retain the Cedar Fair name and the corporate offices in Sandusky. Both boards of the combined company will consist of equal members of each board of the former entities.
The merger would be the largest in the industry, according to industry consultant Dennis Speigel, president of International Theme Park Services in Cincinnati. The deal is expected to give the new company dominance of the regional park market, he added. But he cautioned that a successful integration could mean the closure of smaller parks and prioritization of investment in larger markets. It could also lead to the rebranding of Cedar Fair parks under the Six Flags name. Those risks, along with regulatory hurdles, could keep the companies from achieving their growth potential. The deal is expected to close early in the first half of 2024. The companies have not disclosed how much they will pay for the acquisition or how they expect to fund the transaction. They plan to use debt and cash in the deal.