Six Flags offer to buy Cedar Fair was real... but it's still not happening.Well, it appears that the
Reuters reports that Cedar Fair has rejected what it calls a $4 billion cash-and-stock offer to obtain the theme park chain.
The bid worked out to about $70 a share, which was a substantial increase over the $58 a share that Cedar Fair [FUN] was trading at before news of the proposed deal broke. But that wasn't enough for Cedar Fair's board.
Basically, Cedar Fair's corporate structure is more favorable to shareholders when it comes to paying taxes, and they would have lost that tax advantage if their shares became ones in Six Flags. The Cedar Fair board believes that advantage is worth more than the premium Six Flags offered for the FUN shares.
But none of that gets to the outrage that many theme park fans felt when they heard about the deal. Though they both run regional amusement parks, Cedar Fair and Six Flags offer different experiences, and fans like having that choice. Part of that difference is Cedar Fair not homogenizing its parks to the extent that Six Flags does, and Cedar Fair fans did not want to see parks such as Knott's Berry Farm and Cedar Point lose their unique flavors.
Six Flags' business model right now focuses sharply on the sale of memberships, and the chain has been looking to expand the number of parks that it operates in order to grow that membership base. It's a chain-first approach, while Cedar Fair's is more park-first. Heck, has anyone outside the fan community ever even heard of "Cedar Fair?" Most fans of Cedar Fair parks just know their own park's brand and might not even know that it is part of a chain.
All that said, Six Flags did include a cash component in its takeover bid. If Six Flags really needs to acquire more parks and can't get the entire Cedar Fair chain, it's not inconceivable that Cedar Fair might listen to a cash offer for some of its individual parks, especially smaller parks with weaker brands in locations where Six Flags needs presence.
In corporate mergers and acquisitions, rejected offers often lead to new offers, sometimes from other parties. We will see if this bid turns out to be a one-shot-and-nothing deal... or the start of a new round of M&A bids in the theme park business.Tweet
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