Cedar Fair L.P. and Six Flags Entertainment Corp. said Thursday they have agreed to a merger of equals valued at about $8 billion including debt, confirming a report Wednesday by the Wall Street Journal.
Under the terms of the deal, Cedar Fair unitholders will receive one share of common stock in the new combined company for each unit owned, while Six Flags shareholders will get 0.5800 shares of common stock in the new entity for each share owned.
Once the deal closes, Cedar Fair unitholders will own about 51.2% of the new entity, and Six Flags shareholders will own the remaining 48.8%.
The deal is expected to close in the first half of 2024.
“Our merger with Six Flags will bring together two of North America’s iconic amusement park companies to establish a highly diversified footprint and a more robust operating model to enhance park offerings and performance,” Cedar Fair CEO Richard Zimmerman said in a joint statement issued by the companies.
The new entity will have a portfolio of 27 amusement parks, 15 water parks and nine resort properties across 17 states in the U.S., Canada and Mexico.
The deal is expected to create annual synergies of $200 million. The two companies had combined revenue of $3.4 billion in the 12 months through Sept. 30 after serving 48 million guests. The deal is expected to boost per-share earnings for Cedar Fair unitholders and Six Flags shareholders in the first 12 months after close.
The new company’s free cash flow is expected to allow for greater flexibility to invest in upgrades and new rides and attractions, along with improved food and beverage offerings and other in-park and cross-park initiatives, such as technology and guest services.
“The combined company’s resources are expected to be
strategically deployed to grow attendance, increase per capita spending,
and improve profitability, all while enhancing guests’ value and
experience across the park portfolio,” said the statement.
The companies are also committed to allocating capital to reward shareholders, once the combined company achieves its targeted net-leverage ratio.
The new company will operate under the Six Flags name and trade as “FUN” on the New York Stock Exchange.
Both companies also reported quarterly earnings early Thursday.
Six Flags posted net income of $11 million, or $1.32 a share, for the quarter to Oct. 1, down from $114 million, or $1.37 a share, in the year-earlier period. Revenue rose 8% to $547 million from $505 million.
The FactSet consensus was for EPS of $1.46 and revenue of $539 million.
Cedar Fair posted net income of $215 million, which was down $118 million from a year ago, when it booked a gain on the sale of land at California’s Great America. The company did not offer a per-share earnings breakdown in its release.
Revenue fell by $1 million to $842 million, ahead of the $822 million FactSet consensus.
Six Flags stock
SIX,
+0.14%
rose 1.7% premarket while Cedar Fair
FUN,
-4.27%
rose 1.3%.
Read the full article here
