Now Cedar Fair's looking for a buy-out
Published: July 9, 2007 at 5:36 PM
The amusement park operator has shopped itself to private equity firms, according to a story this morning in the New York Post.
Among the firms approached was the Blackstone Group, which helped fund the creation of Merlin Entertainment Group, which combined Legoland with Madame Tussaud's. Blackstone also holds a stake, with NBC Universal, in the Universal Orlando resort.
The private equity firms, including Blackstone, have been hestitant to buy, according to the Post, citing the presumed cost of the deal. The Post reported that Cedar Fair, which paid $1.2 billion in cash for Paramount Parks last year, has a market capitalization of $1.5 billion and $1.8 billion in debt. Using a formula based on Cedar Fair's current cash flow, the paper estimates the firm could elicit a price of $3.3 billion to $4 billion.
Why sell? Well, the deal would be contingent on a pledge to retain Cedar Fair's current management team. (Which preserves their jobs in a competitive out-of-home entertainment market.) Plus, the infusion of cash would help the company handle its debt without falling into a pre-Snyder-Six Flags-type problem of having to sacrifice capital expansion.