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CEDAR FAIR AGREES TO BE ACQUIRED BY AFFILIATE OF APOLLO GLOBAL MANAGEMENThttp://themeparkreview.com/forum/viewtopic.php?p=1669629#p1669629

 

http://www.cedarfair.com/ir/press_releases/index.cfm?current_root=15&mode=story&story_id=210

 

Press Release:

CEDAR FAIR UNITHOLDERS TO RECEIVE $11.50 PER UNIT

 

SANDUSKY, OHIO, December 16, 2009 -- Cedar Fair, L.P. (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, announced today that it has entered into a definitive merger agreement to be acquired by an affiliate of Apollo Global Management, a leading global alternative asset manager.

 

Under the terms of the agreement, Cedar Fair unitholders will receive $11.50 in cash for each Cedar Fair limited partnership unit that they hold, representing a 43% premium over Cedar Fair’s volume weighted average closing unit price over the past 30 days and a 28% premium over the closing unit price on December 15, 2009. The transaction is valued at approximately $2.4 billion, including the refinancing of the Company’s outstanding indebtedness. Affiliates of J.P. Morgan, B of A Merrill Lynch, Barclays Capital Inc., UBS Investment Bank and KeyBanc Capital Markets have provided an aggregate $1.95 billion financing commitment in support of the transaction.

 

The board of directors of Cedar Fair has unanimously approved the merger agreement and has resolved to recommend that Cedar Fair limited partnership unitholders adopt the agreement.

 

Cedar Fair’s chairman, president and chief executive officer, Dick Kinzel, said, “We have considered a wide range of strategic alternatives over the past several years. After considering these strategic alternatives, we have concluded that the transaction with Apollo is in the best interest of our unitholders.”

 

“This transaction allows Cedar Fair unitholders to realize significant value from their investment in our Company over recent trading levels,” added lead director, Michael Kwiatkowski. “Apollo has a strong track record of growing businesses, and its desire to add Cedar Fair to its portfolio serves as a testament to our solid business model and the talent of our people.”

Aaron Stone, a Senior Partner at Apollo, said, “We are extremely pleased to be acquiring this premier amusement park operator. We look forward to partnering with Cedar Fair’s management team and employees to build on the many strengths of the Company. We are firmly committed to Cedar Fair’s continued growth as an industry leading amusement park operator.”

 

Transaction Details

 

The merger is conditioned upon, among other things, the approval of holders of two-thirds of Cedar Fair’s outstanding units, the receipt of regulatory approvals and other closing conditions. Assuming the satisfaction of these conditions, the transaction is expected to close by the beginning of the second quarter of 2010. The merger agreement does not include a financing condition. Upon completion of the merger, Cedar Fair will become a private company, wholly-owned by an affiliate of Apollo Global Management.

 

Under the terms of the merger agreement, Cedar Fair may solicit alternative proposals from third parties for 40 days and will consider any such proposals. There can be no assurance that the solicitation of such proposals will result in an alternative transaction. In addition, Cedar Fair may, at any time, subject to the terms of the merger agreement, respond to unsolicited proposals.

 

Rothschild Inc. and Guggenheim Securities, LLC are the Company’s financial advisors, and Weil, Gotshal & Manges LLP and Squire, Sanders & Dempsey are its legal advisors. Wachtell, Lipton, Rosen & Katz and O’Melveny & Myers LLP acted as legal advisors and B of A Merrill Lynch, J.P. Morgan, Barclays Capital Inc., and UBS Investment Bank acted as financial advisors to Apollo Global Management in connection with the transaction.

 

 

About Cedar Fair

Cedar Fair is a publicly traded partnership headquartered in Sandusky, Ohio, and one of the largest regional amusement-resort operators in the world. The Company owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels. Amusement parks in the Company’s northern region include two in Ohio: Cedar Point, consistently voted “Best Amusement Park in the World” in Amusement Today polls and Kings Island; as well as Canada’s Wonderland, near Toronto; Dorney Park, PA; Valleyfair, MN; and Michigan’s Adventure, MI. In the southern region are Kings Dominion, VA; Carowinds, NC; and Worlds of Fun, MO. Western parks in California include: Knott’s Berry Farm; California’s Great America; and Gilroy Gardens, which is managed under contract.

 

About Apollo Global Management

Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Singapore, Frankfort and Mumbai. Apollo had assets under management of over $51 billion as of September 30, 2009, in private equity, credit-oriented capital markets and real estate invested across a core group of nine industries where Apollo has considerable knowledge and resources.

 

Forward-Looking Statements

Some of the statements contained in this news release (including information included or incorporated by reference herein) may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements as to the Company’s expectations, beliefs and strategies regarding the future. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond the Company’s control and could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors could adversely affect the Company’s future financial performance and cause actual results to differ materially from the Company’s expectations, including uncertainties associated with the proposed sale of the Company to an affiliate of Apollo Global Management, the anticipated timing of filings and approvals relating to the transaction, the expected timing of completion of the transaction, the ability of third parties to fulfill their obligations relating to the proposed transaction, the ability of the parties to satisfy the conditions to closing of the merger agreement to complete the transaction and the risk factors discussed from time to time by the Company in reports filed with the Securities and Exchange Commission (the “SEC”). Additional information on risk factors that may affect the business and financial results of the Company can be found in the Company’s Annual Report on Form 10-K and in the filings of the Company made from time to time with the SEC. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

From the Sandusky Register:

 

The Wall Street Journal is reporting that Apollo Management LP is expected to acquire Cedar Fair for about $700 million.

 

The deal would also include the assumption of $1.6 billion of debt, said people familiar with the matter.

 

Based in Sandusky, Cedar Fair owns 11 theme parks in the United States and Canada, including Cedar Point and Kings Island.

 

Barring last-minute snags, the deal by the buyout firm is likely to be announced in the coming days, these people said.

 

Cedar Fair's revenue over the 12 months ended in September totaled about $930 million, down 6.3 percent from the similar 2008 period.

 

Cedar Fair has been scrambling to address a number of coming debt obligations, said two of the people familiar with the matter. In March it hired Bank of America Merrill Lynch to relieve its debt load. At the same time, it said it might sell two of its theme parks.

 

According to Google Finance, the amusement park company's stock rose 29.63 percent in after-hours trading to $9.10 per limited partner unit. Apollo Managment LP is a division of Apollo Investment Corp., which announced the closing of its public offering of common stock on Dec. 15.

 

I don't know whether this is good or bad so all the smart ones up in here will have to clue us in.

Edited by jedimaster1227
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Here's the actual article from WSJ if anyone has a subscription:

 

http://online.wsj.com/article/SB10001424052748704541004574600443362702668.html

 

I find this VERY interesting and I'm not sure this would be a bad thing.

 

And here's a little blurb about Apollo which I also found interesting:

http://en.wikipedia.org/wiki/Apollo_Management

Apollo Management L.P. is a private equity investment firm, founded in 1990 by former Drexel Burnham Lambert banker, Leon Black.[2] The firm specializes in leveraged buyout transactions and purchases of distressed securities involving corporate restructuring, special situations and industry consolidations. Apollo is headquartered in New York City, and also has offices in Purchase, New York, Los Angeles and London. The firm has invested over $16 billion in companies.[3]

 

As of December 2008, Apollo managed over US$37 billion of investor commitments across its private equity funds and other investment vehicles making it one of the largest private equity firms globally.[1] Among the most notable companies currently owned by Apollo are AMC Entertainment, Claire's, Harrah's Entertainment, Norwegian Cruise Line and Realogy (Coldwell Banker and Century 21 Real Estate).[4]

 

--Robb

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True or not, check out this comment

" A sale?

 

Get with it register, its a leveraged buyout, a hostile takeover with the sole purpose of making the investment group a profit.

 

The writing is on the wall. They will consolidate the parks rides from sandusky, which has to short of a season, and move all the great coasters to parks that aren't seasonal in order to attract more visitors.

 

Cedar fair will now be a private company and sanduskys park is as good as gone. "

Knotts is going to be the place to be once they get all the rides from the seasonal parks.

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True or not, check out this comment

 

" A sale?

 

Get with it register, its a leveraged buyout, a hostile takeover with the sole purpose of making the investment group a profit.

 

The writing is on the wall. They will consolidate the parks rides from sandusky, which has to short of a season, and move all the great coasters to parks that aren't seasonal in order to attract more visitors.

 

Cedar fair will now be a private company and sanduskys park is as good as gone. "

 

Knotts is going to be the place to be once they get all the rides from the seasonal parks.

 

I HIGHLY doubt that would happen. Considering CP is one of Cedar Fair's most successful parks, and considering how many awards they have won as well as their reputation in general, it's highly unlikely that that would even be considered. As far as other parks, it could happen, but still, unlikely.

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^ Agreed. However I have no idea of what Apollo's past actions have been with other entertainment companies. They have bought AMC Entertainment, Harrah's Entertainment, and Norwegian Cruise Line, for example.

 

Did they de-comission any NCL ships? Did they close any Harrah's casinos? Did they shut down any AMC theaters?

 

If their pattern with other companies has been to shut down underperforming venues in an effort to keep the thriving ones going, then I'd be a bit concerned if I was CGA or MI, but if this hasn't been their approach in the past, I'd doubt it's something they would do...at least not right away.

 

--Robb

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True or not, check out this comment
" A sale?

 

Get with it register, its a leveraged buyout, a hostile takeover with the sole purpose of making the investment group a profit.

 

The writing is on the wall. They will consolidate the parks rides from sandusky, which has to short of a season, and move all the great coasters to parks that aren't seasonal in order to attract more visitors.

 

Cedar fair will now be a private company and sanduskys park is as good as gone. "

Knotts is going to be the place to be once they get all the rides from the seasonal parks.

 

Oh please... That is absurd. That person doesn't know what the hell they're talking about.

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It's a bit hard to say how this is going to affect the chain. This company doesn't have any experience with amusement parks, but they do have experience with other entertainment ventures, like AMC and Harrah's, which I think may be a good thing.

 

Cedar Fair has gone downhill in recent years, partly due to Kinzel and the rest of the upper management calling all decisons and the individual parks having less say in how their parks are run. Since Kinzel has completely lost touch with the aspect of the modern park and the guest itself, this has proven to be negative for the parks and the the company. Apollo certainly has big potential here if they remove him from his position and clean up his mistakes.

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Wow, wasn't expecting this, and this could be great for the chain. While Cedar Fair parks aren't bad, they could still use a lot of work. If the new owners are able to do to Cedar fair what Shapiro has done to Six Flags, this will be a very good thing. I don't think this company is the kind to close under-performing parks, so I don't think we will see any closing soon.

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^ Agreed. However I have no idea of what Apollo's past actions have been with other entertainment companies. They have bought AMC Entertainment, Harrah's Entertainment, and Norwegian Cruise Line, for example.

 

Did they de-comission any NCL ships? Did they close any Harrah's casinos? Did they shut down any AMC theaters?

 

If their pattern with other companies has been to shut down underperforming venues in an effort to keep the thriving ones going, then I'd be a bit concerned if I was CGA or MI, but if this hasn't been their approach in the past, I'd doubt it's something they would do...at least not right away.

 

--Robb

 

That's a good point Robb. In the case of the ship-line, It's pretty hard to de-commision a ship (depending on it's age) but it's possible they sold some. Not sure though.

 

Interesting enough, Neither NCL, Harrah's or AMC is listed among their Portfolio Companies. At least not that I can see (but they are listed on Wikipedia as joint ownership with other corporations)

 

http://www.apolloic.com/public/portfolio_template.asp?pageid=12

 

Also of note, they own "Claire's Boutique" which I know has closed some stores recently. But that's probably more the economy rather than liquidating/consolidating.

 

IMO, it's WAY too early to tell if this is going to effect any parks, but one can't help but speculate.

 

I would think rather than closing any parks, the possibility of selling off lesser parks perhaps?

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^ Agreed. However I have no idea of what Apollo's past actions have been with other entertainment companies. They have bought AMC Entertainment, Harrah's Entertainment, and Norwegian Cruise Line, for example.

 

Did they de-comission any NCL ships? Did they close any Harrah's casinos? Did they shut down any AMC theaters?

 

NCL has seen some changes, but I don't think they're any that are outside the norms of the industry for a multinational company like that. Some ships were transferred to it from Star Cruises. One of the US flagged ships was taken out of the Hawaii routes. The SS United States wasn't refurbed. Harrah's has only expanded over the last few years. They just announced plans to buy Planet Hollywood in Vegas, and have done a made a number of purchases in the last 36 months in smaller markets.

 

I don't know what to expect, but I'll hope for the best. As far as I'm concerned, this might be a good thing for Knotts in terms of re-establishing its roots.

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That's a good point Robb. In the case of the ship-line, It's pretty hard to de-commision a ship (depending on it's age) but it's possible they sold some.

That's actually what I meant.

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Since Kinzel has completely lost touch with the aspect of the modern park and the guest itself, this has proven to be negative for the parks and the the company.

 

Its a not so big secret that Kinzel is likely retiring after next year.

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Since Kinzel has completely lost touch with the aspect of the modern park and the guest itself, this has proven to be negative for the parks and the the company.

 

Its a not so big secret that Kinzel is likely retiring after next year.

Hasn't he been "likely to retire" for the last 10 years or so now?

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I'm just sayin' what I've been told about Kinzel. Don't kill the messenger.

 

Yeah, they're a private equity firm, like Blackstone, Carlyle Group, Colony Capital, etc. The idea is that they can finance aspects of an undervalued business that it by itself cannot (debt, expansion, whatever), and then over the long run, they can make boatloads of money.

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So...this company just buys other companies? And then...runs them? That's their whole purpose as a company?

 

Private equity firms, in theory, can have an advantage in that they don't have to run everything to look good for stockholders. In other words, they can try more long term strategies and not have to worry about Wall Street punishing them for a bad quarter or two.

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^ Agreed. However I have no idea of what Apollo's past actions have been with other entertainment companies. They have bought AMC Entertainment, Harrah's Entertainment, and Norwegian Cruise Line, for example.

 

Did they de-comission any NCL ships? Did they close any Harrah's casinos? Did they shut down any AMC theaters?

 

If their pattern with other companies has been to shut down underperforming venues in an effort to keep the thriving ones going, then I'd be a bit concerned if I was CGA or MI, but if this hasn't been their approach in the past, I'd doubt it's something they would do...at least not right away.

 

--Robb

 

I work for Harrah's Entertainment and have worked here since before we were purchased by Apollo (along with another company). There really hasnt been a major change aside from some capital projects being put on hold (mostly due to the economy). In fact we have remained the largest and most stable of any of the gaming companies around.

 

I find this interesting news as we recently purchased a racetrack near Cleveland. Ohio, as many know, is close to legalizing gaming, so I imagine its a prudent move to get a strong footing there.

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This is very interesting, considering I had heard nothing of Cedar Fair even being sold before this. I really like what CF has done for Kings Dominion, but I really don't want to make my opinion on Apollo until they actually get in the driver's seat and start making decisions.

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