Six Flags [FUN] Corporate Discussion Thread

[KICoasterkev]

I can see CF buying a few of the better SF parks like FT or GA, but I don't know about merging the whole company together, some parks might get sold or worse close. I guess we'll see what happens tomorrow. 

[AmyUD06]

23 minutes ago, KICoasterkev said:

 some parks might get sold or worse close.

Or even worse, become Six Flags parks.

[michaellynn4]

I'm fine with it if it means SFGAdv can go back to being called just "Great Adventure" like every true-blooded New Jerseyite does.

[mruab]

the FTC would likely require they sell any parks in the same market to other theme park companies to keep competition alive

[jedimaster1227]

Six Flags and Cedar Fair have entered into an agreement to merge into a unified company under the "Six Flags" brand, comprised of 27 amusement parks, 15 water parks and 9 resort properties across 17 states, Canada and Mexico. The deal is expected to close in the first half of 2024, following receipt of Six Flags shareholder approval, regulatory approvals, and satisfaction of customary closing conditions.

https://investors.sixflags.com/news-and-events/press-releases/2023/11-02-2023-100020810

Cedar Fair (NYSE: FUN) and Six Flags Entertainment Corporation (NYSE: SIX) today announced that they have entered into a definitive merger agreement to combine in a merger of equals transaction. The combined company, with a pro forma enterprise value of approximately $8 billion based on both companies’ debt and equity values as of October 31, 2023, will be a leading amusement park operator in the highly competitive leisure space with an expanded and diversified footprint, a more robust operating model and a strong revenue and cash flow generation profile.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, Cedar Fair unitholders will receive one share of common stock in the new combined company for each unit owned, and Six Flags shareholders will receive 0.5800 (the “Six Flags Exchange Ratio”) shares of common stock in the new combined company for each share owned. Following the close of the transaction, Cedar Fair unitholders will own approximately 51.2%, and Six Flags shareholders will own approximately 48.8%, of the combined company’s fully diluted share capital on a pro forma basis. One business day prior to the close of the transaction, Six Flags will declare a special cash dividend composed of: (i) a fixed amount of $1.00 per outstanding Six Flags share, totaling approximately $85 million in the aggregate, plus, (ii) an amount per outstanding Six Flags share equal to (a) the aggregate per unit distributions declared or paid by Cedar Fair to unitholders with a record date following today’s date and prior to the close of the transaction, multiplied by (b) the Six Flags Exchange Ratio, which special dividend will be payable to Six Flags shareholders of record as of one business day prior to the close of the transaction, contingent on the closing of the transaction.

“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,” said Richard Zimmerman, President and Chief Executive Officer of Cedar Fair. “Together, we will have an expanded and complementary portfolio of attractive assets and intellectual property to deliver engaging entertainment experiences for guests. The combination also creates an enhanced financial profile with strong cash flow generation to accelerate investments in our parks to delight our guests, driving increased levels of demand and in-park value and spending. I have great respect for the Six Flags team and look forward to joining forces as we embark on this next chapter together.”

“The combination of Six Flags and Cedar Fair will redefine our guests’ amusement park experience as we combine the best of both companies,” added Selim Bassoul, President and Chief Executive Officer of Six Flags. “Six Flags and Cedar Fair share a strong cultural alignment, operating philosophy, and steadfast commitment to providing consumers with thrilling experiences. By combining our operational models and technology platforms, we expect to accelerate our transformation activities and unlock new potential for our parks. We are excited to unite the Cedar Fair and Six Flags teams to capitalize on the tremendous growth opportunities and operational efficiencies of our combined platform for the benefit of our guests, shareholders, employees, and other stakeholders.”

Compelling Strategic and Financial Benefits

• A Successful Amusement Park Operator with Complementary Portfolio of Attractive Assets: The combined company will operate a portfolio of 27 amusement parks, 15 water parks and 9 resort properties across 17 states in the U.S., Canada, and Mexico. The company’s complementary portfolio will include some of the most iconic parks in North America with significant brand equity and loyal, recurring guest bases within the highly competitive leisure space. The combined company will also have entertainment partnerships and a portfolio of beloved IP such as Looney Tunes, DC Comics and PEANUTS to develop engaging new attractions enabled by compelling characters, environments, and storytelling.
• Diversified Footprint and Guest Experiences: Cedar Fair and Six Flags have minimal market overlap of park operations, and the combined company’s complementary geographic footprint is expected to mitigate the impact of seasonality and reduce earnings volatility through a more balanced presence in year-round operating climates. The portfolio will include diversified experiences for guests including safaris and animal experiences, campgrounds, sports facilities and luxury lounges, enabling the combined company to better meet rising consumer demand for varied and engaging entertainment options.
• Enhanced Operating Platform to Improve Guest Experiences: By uniting Cedar Fair and Six Flags’ complementary operating capabilities, the combined company will benefit from a more robust operating platform for improved park offerings and more efficient systemwide performance. The companies expect to leverage Cedar Fair’s recent park investment experience to accelerate the transformation underway across Six Flags’ portfolio. Cedar Fair and Six Flags will seek to create a more engaging and immersive guest experience. The combined company will also offer expanded park access to season pass holders along with an enhanced, combined loyalty program featuring additional perks.
• Experienced and Proven Leadership Team: The senior leadership teams of Six Flags and Cedar Fair bring different and complementary skillsets and experience to the combined company, including decades of park operating experience as well as significant expertise integrating businesses and achieving synergy targets.
• Significant Cost Savings and Revenue Uplift Opportunity: Following the close of the transaction, Cedar Fair and Six Flags expect the combined company will benefit from the significant value created by total anticipated annual synergies of $200 million. Approximately $120 million of these synergies are expected to be related to identified administrative and operational cost savings, which the companies anticipate realizing within two years following transaction close. The companies also expect to leverage their complementary operating capabilities to deliver additional revenue uplift, generating approximately $80 million of incremental EBITDA that the companies anticipate realizing within three years of transaction close.
• Strong Financial Profile: Over the last 12 months, through the third quarter of fiscal 2023, Six Flags and Cedar Fair collectively entertained 48 million guests, and, as a combined company, would generate pro forma $3.4 billion1 in revenue, $1.2 billion1 in Adjusted EBITDA2, and $826 million1,3 of free cash flow4, reflecting run rate cost savings of $120 million and revenue uplift resulting in $80 million of incremental EBITDA. The transaction is expected to be accretive to earnings per share for Cedar Fair unitholders and Six Flags shareholders within the first 12 months following transaction close. The combined company is also expected to have a pro forma leverage ratio of approximately 3.7x net debt to Adjusted EBITDA, inclusive of synergies, with a path to reduce the leverage ratio to approximately 3.0x within two years of transaction close.
• Significant Free Cash Flow Generation and Enhanced Financial Flexibility: The combined company’s increased free cash flow will provide it with greater flexibility to invest in new rides and attractions, broader food and beverage selections, additional in-park offerings, and cross-park initiatives, such as consumer technology and enhanced 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. The combined company is committed to allocating capital to maximize shareholder returns once the company achieves its targeted net leverage ratio.

Leadership, Corporate Governance and Headquarters

The combined company will be led by a proven management team that reflects the strengths and capabilities of both organizations. Upon closing of the transaction, Richard Zimmerman, President and Chief Executive Officer of Cedar Fair, will serve as President and Chief Executive Officer of the combined company and Selim Bassoul, President and Chief Executive Officer of Six Flags, will serve as Executive Chairman of the combined company’s Board of Directors. Brian Witherow, Chief Financial Officer of Cedar Fair, will serve as Chief Financial Officer of the combined company and Gary Mick, CFO of Six Flags, will serve as Chief Integration Officer of the combined company.

Following closing of the transaction, the newly formed Board of Directors of the combined company will consist of 12 directors, six from the Cedar Fair Board and six from the Six Flags Board.

Upon closing of the transaction, the combined company will operate under the name Six Flags and trade under the ticker symbol FUN on the NYSE and will be structured as a C Corporation. The combined company will be headquartered in Charlotte, North Carolina, and will maintain significant finance and administrative operations in Sandusky, Ohio.

Approvals and Closing

The merger is expected to close in the first half of 2024, following receipt of Six Flags shareholder approval, regulatory approvals, and satisfaction of customary closing conditions. Approval by Cedar Fair unitholders is not required. Six Flags’ largest shareholder, which owns approximately 13.6% of Six Flags’ shares outstanding, has signed a voting and support agreement to vote in favor of the transaction. The transaction is not expected to trigger any change of control provision under Cedar Fair’s and Six Flags’ respective outstanding Notes. The companies expect to refinance their respective revolving credit facilities, and Six Flags expects to refinance the Six Flags Term Loan, ahead of transaction close.

Cedar Fair and Six Flags Third Quarter 2023 Results

In separate press releases today, Cedar Fair and Six Flags reported results for the third quarter of fiscal year 2023. The Cedar Fair release is available at https://ir.cedarfair.com and the Six Flags release can be found at https://investors.sixflags.com.

Advisors

Perella Weinberg Partners is serving as exclusive financial advisor and Weil, Gotshal & Manges LLP and Squire Patton Boggs (US) LLP are serving as legal counsel to Cedar Fair. Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Kirkland & Ellis LLP is serving as legal counsel to Six Flags.

Conference Call and Additional Materials

Cedar Fair, L.P. (NYSE: FUN) and Six Flags Entertainment Corporation (NYSE: SIX) will host a conference call at 8:30 a.m. ET today to discuss the pending merger and review both companies’ third quarter 2023 results. Participants on the call will include Six Flags President and CEO Selim Bassoul, Cedar Fair President and CEO Richard Zimmerman, Cedar Fair Executive Vice President and CFO Brian Witherow, and Six Flags CFO Gary Mick.

Investors and all other interested parties can access a live, listen-only audio webcast of the call on the Cedar Fair and Six Flags websites. Those unable to listen to the live webcast can access a recorded version of the call on either company’s investor website Past Events, shortly after the live call’s conclusion.

A replay of the call will also be available by phone starting at approximately noon ET on Thursday, Nov. 2, 2023, until noon ET, Thursday, Nov. 9, 2023. To access the phone replay, please dial (866) 813-9403 or (929) 458-6194, followed by the Conference ID: 830378.

About Cedar Fair

Cedar Fair Entertainment Company (NYSE: FUN), one of the largest regional amusement-resort operators in the world, is a publicly traded partnership headquartered in Sandusky, Ohio. Focused on its mission to make people happy by providing fun, immersive, and memorable experiences, the Company owns and operates 13 properties, consisting of 11 amusement parks, four separately gated outdoor water parks, and resort accommodations totaling more than 2,300 rooms and more than 600 luxury RV sites. Cedar Fair’s parks are located in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Missouri, Michigan, Texas and Toronto, Ontario.

This news release and prior releases are available under the News tab at http://ir.cedarfair.com

[A.J.]

The separate thread that was created yesterday with the Reuters piece has been merged with this one. Please use this thread to talk about the news and do not create additional threads. Thanks everyone!

[AmyUD06]

Zimmerman staying at the top is good....but yeah I'm not feeling good about this.

Just please keep CF's dedication to seasonal decorations and theatrics and skip-the-line program, please?

[abovethesink]

Ya'll ready for Six Flags Cedar Point?

Joking (hopefully, I don't think they would mess with that branding) aside, this leaves me with a sick feeling in my gut. If we get an elevation of the Six Flags parks towards previous Cedar Fair standards, I will be the first in here and everywhere I post to praise the new mega-chain. That just isn't what my gut is telling me to expect. When corporate power consolidates in a well developed industry, consumers suffer more often than not. Here is to hoping this is an exception, I guess. There certainly is a world in which the mega-chain maintains the Cedar Fair standards and slowly elevates the key Six Flags parks up to say a King's Island or Cedar Point quality experience. It isn't like the elite Six Flags parks are THAT far behind, I guess. I just don't feel good about any of this.

Maybe it is just the Six Flags branding sticking around that is getting to me. Maybe that is a meaningless distinction. In one sense it was probably a no brainer to go with it from a marketing perspective. Six Flags is a nationally known brand while Cedar Fair isn't. I just don't want one national brand. I want unique regional experiences. 

[abovethesink]

On the bright side, while you probably will have to take out a mortgage for it, there will likely emerge a one price pass for all of Six Flags and Cedar Fair parks after a while. That will be great for us enthusiasts.

[Rai Fox]

RIP six flags legacy memberships.

[Zand]

Get ready for short operating seasons. RIP HITP when the Cedar Fair influence gets its way. Hope this upcoming New Year's Day at Great Adventure isn't the last one.

When do they start painting Millennium Force red with blue supports?

[RaceBoarder]

$22/month for all 27 parks with four baked in Skip the Line passes isn't too much to ask for out of this deal, is it?   LOL...

 

RIP Diamond VIP Membership...

[willh51]

I am not sure how to feel about this.  I'm going to be optimistic and I definitely agree with those hoping this will elevate some of the Six Flags parks to higher standards.  Let's look to Fiesta Texas, Cedar Point and King's Island as examples for the entire mega-chain.  

I can't help but wonder what this is going to do for certain coasters and attractions.  On one hand, Cedar Fair is generally better at maintaining legacy rides (Montezooma debacle aside); so Demon at Great America and Viper at Magic Mountain may be with us for the long-haul.  Not sure how this will affect rides like Kingda Ka.  Will Nitro keep running in the snow at Great Adventure?  I guess time will tell.   

[daveydo5172]

Will the combined company keep/maintain two competing parks in the same market? If not, which will be sold off/closed down...Knotts or Magic Mountain? 

[TrippinBillie]

Here's a powerpoint prezo that was reviewed in the call:

 

https://s2.q4cdn.com/170666959/files/doc_presentations/2023/11/FINAL-Investor-Presentation-11-02-2023.pdf

[AmyUD06]

56 minutes ago, Zand said:

Get ready for short operating seasons. RIP HITP when the Cedar Fair influence gets its way. Hope this upcoming New Year's Day at Great Adventure isn't the last one.

When do they start painting Millennium Force red with blue supports?

What are you on about? Winterfest, at the parks that run it, blows HITP away in every area except ride selection. 

[Zand]

Just now, AmyUD06 said:

What are you on about?

 

 

ride selection. 

This.

[DirkFunk]

Ask yourself this question: are either Six Flags or Cedar Fair better today in 2023 than they were in 2018 from a perspective of operations and guest satisfaction? I know, I know the world is different and changed versus 5 years ago. But I'm also talking about 5 years ago. Not ancient history. 5 years ago. How do they perform against a standard they themselves set? I have my opinions. I'm sure you all collectively have yours. I don't see how this merger does anything to change my expectations of the joined brand. 

[Zack44]

Well THIS is something I never thought would happen in a million years.

I'm thinking back to where Six Flags was about 15 years ago as a company (eliminating a bunch of rides, opening barbershops for some reason, and eventually filing for Chapter 11 bankruptcy) and how far they've bounced back to get to this announcement. It's super uncanny.

[Hilltopper39]

Feels like there isn't enough information yet to really have much of an opinion on this one way or the other yet, but one thought I had was how much better or worse can either of the parks really get at this point?

 

I mean tickets and passes are relatively cheap, Fast Lane and Flash Pass are somewhat expensive, I doubt that changes that drastically. Staffing issues are still going to exist, food is still going to be expensive and mediocre. I don't know I just can't really see where either chain gets that much better or worse at this point. 

[abovethesink]

1 hour ago, daveydo5172 said:

Will the combined company keep/maintain two competing parks in the same market? If not, which will be sold off/closed down...Knotts or Magic Mountain? 

They have competed because they had different ownership. Parks next to each other don't necessarily have to compete. They can use a synergy based strategy instead. The main example of this in the US right now is all the sister parks in Orlando. If there is a market big enough to replicate that in, I would say LA fits the bill. Sell two day passes with a day at each park, offer a shuttle if it makes sense, offer a cheaper season pass option that includes those two parks and excludes the rest of the chain, etc. 

There is a small change regulators make them divest one of the properties but I doubt it.

[redfoot12]

I wake up this morning to find that dogs and cats after living together. 

I'm fine with this if Six Flags parks get quality of life upgrades and some Cedar Fair rides lose their generic theming and get revamped and reinvigorated. 

[daveydo5172]

45 minutes ago, abovethesink said:

They have competed because they had different ownership. Parks next to each other don't necessarily have to compete. They can use a synergy based strategy instead. The main example of this in the US right now is all the sister parks in Orlando. If there is a market big enough to replicate that in, I would say LA fits the bill. Sell two day passes with a day at each park, offer a shuttle if it makes sense, offer a cheaper season pass option that includes those two parks and excludes the rest of the chain, etc. 

There is a small change regulators make them divest one of the properties but I doubt it.

Lets look at the current aquisition of Albertsons by Kroger. Kroger will be closing all Albertsons that are directly competing/in the same vicinity as the Kroger stores...over 400 of them. Its a business practice that happens during all mergers, and it can happen with this one.

[realKyle]

SeaWorld and Herschend trying to compete with Cedar Flags:

 

[DirkFunk]

23 minutes ago, daveydo5172 said:

Lets look at the current aquisition of Albertsons by Kroger. Kroger will be closing all Albertsons that are directly competing/in the same vicinity as the Kroger stores...over 400 of them. Its a business practice that happens during all mergers, and it can happen with this one.

There's also going to be parks which are outside the bounds of what the target audiences are of the company or whom have other issues potentially kneecapping them. Coaster enthusiasts are frankly not that smart and not very into the business side of stuff, which is why I've seen literally no one say "Hey, when do those contracts for operation of SFOT and SFOG come up again?" 

They're gonna be laden with debt and both companies have been hurting hard the last few years in every imaginable way, passing all their issues onto the customers (which is part of why they are doing so badly). They've cut a lot of their leadership, especially in stuff like group sales and advertising, turning into regional teams rather than having employees at the park level. The announcement and discussion basically reinforces to me that they intend to operate with what one half would have used in that skeleton crew sort of system and let go of the "duplicative labor". Parks are going to go away. Lots of parks. CGA is already going away. It will be joined by others which will not be sold to operators because then they'd be selling themselves competition.