Six Flags and Cedar Fair Merge

[BeeastFarmer]

Someone with knowledge help me. As I understand it:

1. SEC has given the blessing for the merger.

2. Now on March 12, SIX shareholders will vote to approve or deny.

3. DOJ is/was asking for further information based on SEC request. Does the SEC blessing mean that the DOJ review is no longer needed?

4. If government is satisfied and SIX shareholders approve, the merger is ready to consummate?

5. Finally, the new company will trade under FUN but the corporate entity will be Six Flags.  Will the new company have shares or units?  One thing that made FUN attractive to investors was the corporate structure which provided tax benefits. 

[BoddaH1994]

VERY interesting article...

Quote

 

Under that arrangement, the Cedar Fair board does not need a vote of approval from its shareholders — also called unitholders — for the deal to be approved.

"How the board did this hurts Cedar Fair unitholders in the pocketbook," Rachlin said. "We're paying $85 million to Six Flags shareholders for us to have the privilege not to vote on this merger."

 

https://sanduskyregister.com/news/502802/rotten-deal-raises-concern/#:~:text=The proposed merger is a,a way that hurts them."

Any guesses why the unit holders don't get a vote? I have theories.

[disco2000]

The unitholders not getting a vote isn't new news - it was mentioned when the merger was announced, including being referenced in the 5th post in this thread by @DispatchMaster the day the news broke.  But everyone's attention was diverted to the actual announcement and the most vocal probably didn't own units anyway so it wasn't a topic of discussion.

But CF is the majority owner everyone says....

 

 

 

[DispatchMaster]

9 hours ago, BoddaH1994 said:

Any guesses why the unit holders don't get a vote? I have theories.

Not exactly clear on what you're alluding to, but they explain why in that article and others than proceeded it - the deal was structured in a way that gives FUN 51% ownership, thus negating the requirement of a vote by FUN unitholders. 

[BoddaH1994]

1 hour ago, DispatchMaster said:

Not exactly clear on what you're alluding to, but they explain why in that article and others than proceeded it - the deal was structured in a way that gives FUN 51% ownership, thus negating the requirement of a vote by FUN unitholders. 

 I’m not sure why CF having a 51% stake would negate the unit holders’ vote. Honestly, people are reading WAY too much into the 51/49 thing. It’s very much a merger of equals.

My theory is that when they added the poison pill measure in 2009-ish to combat the Jeffrey Reynor/Q Investments hostile takeover involving the Apollo leveraged buyout that they also added a measure that allowed them to merge without an equity vote. This would prevent what happened last time.  
 

2 hours ago, disco2000 said:

The unitholders not getting a vote isn't new news - it was mentioned when the merger was announced, including being referenced in the 5th post in this thread by @DispatchMaster the day the news broke.  But everyone's attention was diverted to the actual announcement and the most vocal probably didn't own units anyway so it wasn't a topic of discussion.

But CF is the majority owner everyone says....

 

 

 

I know it’s not new news, but I felt like the article laid out the opposition pretty well. The benefits are obvious, the opposition is a little more clunky. 

[DispatchMaster]

12 minutes ago, BoddaH1994 said:

 I’m not sure why CF having a 51% stake would negate the unit holders’ vote.

Because that's the threshold defined in the CF partnership agreement, at least as far back as 2011, the date of the most recent revision as far as I am aware.

Specifically, so long as CF continues "to represent (either by remaining Outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity or its parent corporation) more than fifty-one percent (51%) of the voting interest of the partnership interests", no vote is required.

Yes, on paper, it is a "merger of equals", but only on paper. Show me any previous so-called "merger of equals" that was truly beneficial to both parties involved. SF was barely treading water before this, hence their justification to pay $85 million specifically to avoid a CF unitholder vote they knew they'd likely lose. And the current CF board seems clearly fixated on short term gains at the expense of long term health, probably so they can put some bullet points on their resumes when they abandon a sinking ship in the future.

[BoddaH1994]

14 minutes ago, DispatchMaster said:

Because that's the threshold defined in the CF partnership agreement, at least as far back as 2011, the date of the most recent revision as far as I am aware.

Specifically, so long as CF continues "to represent (either by remaining Outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity or its parent corporation) more than fifty-one percent (51%) of the voting interest of the partnership interests", no vote is required.

Yes, on paper, it is a "merger of equals", but only on paper. Show me any previous so-called "merger of equals" that was truly beneficial to both parties involved. SF was barely treading water before this, hence their justification to pay $85 million specifically to avoid a CF unitholder vote they knew they'd likely lose. And the current CF board seems clearly fixated on short term gains at the expense of long term health, probably so they can put some bullet points on their resumes when they abandon a sinking ship in the future.

Yeah, I’m sure it has language in the prospectus. Like I said, my guess is it was entered when they added the poison pill. That was before 2011, so the timeline checks out. 
 

By the way, if anyone is taking solace in the 51/49% thing, that’s nonsense. Very much on paper. In fact, if what @DispatchMaster is saying is accurate (and I do believe them) then they may have done that to specifically bypass the hurdle of a CF equity vote. Just speculation. This won’t be CF taking over SIX. It’s simply not going to look like this. Almost every aspect of the business will change - for better or worse. 

[disco2000]

^and as I have said before, with the board being an equal split and the head of integration being a SIX employee, it could very well lean towards SIX operations as time goes on.

[DispatchMaster]

In other words, a change for the worse.

[BoddaH1994]

47 minutes ago, DispatchMaster said:

In other words, a change for the worse.

To be fair, we don’t know that. 
 

The thing that needs to be clear is that, especially with the 51/49 thing, this isn’t necessarily Six Flags becoming Cedar Fair. In the long term, there will be no “business as usual” as we know it now 

[Tr0y]

16 hours ago, BoddaH1994 said:

VERY interesting article...

https://sanduskyregister.com/news/502802/rotten-deal-raises-concern/#:~:text=The proposed merger is a,a way that hurts them."

Any guesses why the unit holders don't get a vote? I have theories.

I’m assuming these folks forgot to read the fine print that clearly states, “subject to change” when making a purchase from Cedar Fair.

Caveat Emptor. 

 

 

 

[BoddaH1994]

1 hour ago, Tr0y said:

I’m assuming these folks forgot to read the fine print that clearly states, “subject to change” when making a purchase from Cedar Fair.

Caveat Emptor. 

 

 

 

Oof... does that apply to the Units too???

[IBEW_Sparky]

Not if they are Premier unitholders.

[BoddaH1994]

17 hours ago, IBEW_Sparky said:

Not if they are Premier unitholders.

Those with preferred stock get to sit in the VIP lounge. 
 

edit

I received a prospectus for anyone with a ton of time on their hands:

https://materials.proxyvote.com/Approved/150185/20240124/NPSPR_559684.PDF

[Hawaiian Coasters 325]

Things are starting to get interesting about a potential merger between WB and Paramount. If both this and the SIX/CF merger both happen, it makes me wonder if we could potentially see some Paramount IP's return especially since 2 of the higher ups in the new SIX company (Zimmerman and Fisher) were GMs of Paramount parks during the Paramount Days.

https://www.planetattractions.com/news/Paramount-and-Warner-Bros-Discovery-continue-to-discuss-a-potential-US$38bn-merger---here’s-what-it-could-mean-for-the-attractions-industry/3116

[disco2000]

Keep in mind the IP the SIX has is very limited in nature and not their entire portfolio.

Another issue is the always seem to be rumor that Paramount is looking to get back into the park business.  Who knows maybe a merger between WB/Paramount and they decide to make a run again and do not renew their IP with SIX when it expires.

[Hawaiian Coasters 325]

35 minutes ago, disco2000 said:

Keep in mind the IP the SIX has is very limited in nature and not their entire portfolio.

Another issue is the always seem to be rumor that Paramount is looking to get back into the park business.  Who knows maybe a merger between WB/Paramount and they decide to make a run again and do not renew their IP with SIX when it expires.

Those are some great points and I could definitely see Paramount getting back into the park business in the future (as long as they don't touch KI lol). Also with the IP being limited, I think imo what I would do if I were in charge if both mergers happen is I wouldn't go after the whole Paramount brand, I would just go after Nickelodeon for theming/branding for the kids area and even events. I would do that because out of the other IPs in the SIX/CF portfolio Nickelodeon is definitely the most relevent to kids these days. Like they're literally helping broadcast the Superbowl for this reason lol. 

With that being said, I would personally keep Camp Snoopy as is, but I would do a Nick retheme of the remainder of the kids area. Remember this is just me dreaming in fantasy land and I definitely think the odds of this happening are very slim even if both mergers happen. 

[disco2000]

Could you imagine if WB/Paramount merge and then purchase CF/SIX after merger...

[BeeastFarmer]

Nickelodeon characters are trashy. 

[Orion-XL200]

26 minutes ago, BeeastFarmer said:

Nickelodeon characters are trashy. 

Watch your mouth, Tommy Pickles, Football Head Arnold, Rocko, Eliza Thornberry and Doug were stand up characters! 

[BeeastFarmer]

They all look like a 4th grader blindfolded, in the middle of Mammoth Cave drew them.

[CoastersRZ]

What is interesting is that Sea World Entertainment is renaming themselves to United Parks and Resorts.  One can`t help but wonder what would happen if they merged with the Six Flags/Cedar Fair?  Again the economics might not work out, and there are a few markets where they have some overlap (Texas and Virginia), but Sea World was interested in Cedar Fair before.

[PKIDelirium]

From what I've seen it's more likely that Paramount will merge with Skydance rather than WB.

[DiamondbackFan]

13 hours ago, CoastersRZ said:

What is interesting is that Sea World Entertainment is renaming themselves to United Parks and Resorts.  One can`t help but wonder what would happen if they merged with the Six Flags/Cedar Fair?  Again the economics might not work out, and there are a few markets where they have some overlap (Texas and Virginia), but Sea World was interested in Cedar Fair before.

I think United Parks and Resorts merging with Parques Reunidos would make more sense.

[BoddaH1994]

On 2/8/2024 at 7:03 PM, BeeastFarmer said:

Nickelodeon characters are trashy. 

The characters were problematic. 
 

Spongebob was the timeless one, but I feel like we are way of his hump in popularity.

Wild Thornberrys was off the air in the U.S. when the log flume was rethemed.

Many of the characters are live action, which doesn’t help. 

The heyday of Nickelodeon was ending when Splat City was coming in. All the Gak, “kids rule” etc stuff was great, but they don’t do stuff as much anymore. 

It would be cool to have Star Trek, Mission Impossible, and so on back though. Unfortunately, the extend of their theming was often to drop a movie name on an off-the-shelf ride.

Of course, it’s been a very long time…

[BeeastFarmer]

SIX earnings call, in a very brief read, looks dismal. FUN would be wise, if possible, to renegotiate...if they were in a strong position, which they are not. 

Of course, this is from a cursory glance and I'm not a financial expert. 

[disco2000]

CF attendance down while SIX attendance was up for the year:

CF:

For the year ended Dec. 31, 2023, net revenues totaled $1.80 billion on attendance of 26.7 million guests, compared with net revenues of $1.82 billion on attendance of 26.9 million guests in 2022. The decrease in net revenues reflects the impact of a 1%, or 247,000, decline in attendance and a 1%, or $0.60, decrease in in-park per capita spending

SIX:

Attendance increased by 1.8 million guests or 9% to 22.2 million. We estimate that adverse weather reduced full-year attendance by over 1 million guests. This includes rain and snow in California during spring break, followed by a record summer heat wave in Texas and eight consecutive weekends of rain or threat of rain in the Mid-Atlantic and Northeast after Labor Day. Total revenue increased by $68 million or 5%, driven by higher attendance and higher sponsorship revenue partially offset by lower per capita spending.

 

[Shawn Meyer]

When are the Six Flags unit holders supposed to vote on the merger? Everything is too quiet lately. 

[Kenban]

On 2/29/2024 at 4:31 PM, disco2000 said:

CF attendance down while SIX attendance was up for the year

Because Six Flags attendance never recovered from the pandemic.  They had an attendance in 2019 of 32.8 million.  They are still over 10 million guests a year below their 2019 attendance.  

Cedar Fair had a 27.9 million attendance in 2019.  So Cedar Fair is down a little over a million or roughly 4% of their 2019 attendance.  Over the same period Six Flags is down 32%.

[silver2005]

1 hour ago, Shawn Meyer said:

When are the Six Flags unit holders supposed to vote on the merger? Everything is too quiet lately. 

I'm curious what happens at Six Flags if this doesn't go through.   By some things I've read and heard, they're kind of up s*** creek without a paddle.