Friday, October 4, 2019

Short Lived Sale of Cedar Fair to Six Flags Reported to be Dead in the Water

Just days after breaking the news that Six Flags Entertainment had made an offer to purchase Cedar Fair, Reuters has followed up with news that the deal is now dead, with Cedar Fair rejecting the bid as too low.

Of course, there's no doubt a lot more factors than just the bid being too low, but we're still working off of anonymous sources, not factual statements from either company.  The story states that the bid was for around $70 a unit, which wasn't nearly enough to make up for tax consequences that investors and the company would face from losing Cedar Fair's somewhat unusual limited partnership tax status. 

That bid would have valued the deal at around $4 billion, a big number indeed, but considering that is right around Six Flags Entertainment's market cap and most of the deal was to be paid with Six Flags shares, also telling of how much debt the new company would have had... and potentially precarious their financials would have been.

Rueters is also reporting that Six Flags offered Cedar Fair management members to remain in leadership roles of the company, as Six Flags' is still searching for a new CEO, but that didn't move the needle either.

Interestingly, fans of the industry that poo-pooed the deal left and right on social media got mentioned by Reuters in the article as they said that "reactions from stock market investors, as well as amusement park fans concerned about the impact of the potential deal on how Cedar Fair parks will be run, have been negative..."

As of right now they're reporting that there is no indication Six Flags will counter offer, and frankly I'm not sure how much higher they could possibly go anyway, financially speaking.  Big money is cheap right now, but not that cheap.

So as fans of both parks mostly take a big sigh of relief we'll continue to watch for any bits of news related to the story.