Six Flags & Cedar Fair Merger Rumors

Theme Park News

There have been a number of shakeups in the amusement industry since I’ve started this blog in 2006. Closings, acquisitions, and sales have been a sign of the times for the industry. If the latest rumor in the theme park business World comes to fruition it would be more like an earthquake than a shakeup.

The Wall Street Journal recently reported that there may be a Six Flags Cedar Fair merger in the works. Or, at least, that there’s speculation that there may be a merger. The WSJ article can’t be fully read unless you’re a member, but this Cleveland.com article explains the thinking behind the speculation:

According to the [Wall Street Journal] article, some of Six Flag’s creditors think Apollo could be working with Avenue Capital Management, an investment fund that is leading the drive to take over Six Flags in Chapter 11. The Web site reported that Andrew Dash, an attorney representing Six Flag’s unsecured creditors pressed Six Flag’s Chief Financial Officer Jeffrey Speed during a bankruptcy hearing to tell him why representatives of Avenue Capital had made a visit to Cedar Fair.

Speed confirmed the visit, but said he could “only speculate” that Avenue was trying to learn more about the amusement park business now that it was committed to leading a $450 million equity raise to bail out Six Flags. -Cleveland.com

So, it sounds like Avenue (a company that’s looking to acquire Six Flags) was spotted in Sandusky. I suppose that in the business World that’s enough to spark speculation of a merger. Could Avenue and Apollo be working together on a plot to merge the U.S.’s largest regional theme park chains?

While, this still sounds like just speculation the source is more well-founded than an anonymous tip sent to ScreamScape or the Dip N’ Dots guy who works next to the bumper cars like many amusement industry rumors. The implications would be wide-reaching and huge. Combined, the new merged company would have 34 theme parks and water parks in North America.

I would assume that there wouldn’t be a fear of a monopoly as there would still be Disney, Universal, SeaWorld Parks ( including the Busch parks), Herschend, and PARC as the other major amusement park chains in the States. Of course independent parks like Knoebels and Holiday World would still be players as well. But, the competition between these two perennial rivals would be over.

The questions of a possible merger are endless. What would a company that huge operate like? Would it really be better overall for both companies? Which management would run the merged company Cedar Fair’s, Six Flags’, or a combined team? The one thing that I do know is that the multi-park season pass would be amazing!

The Sandusky Register has more: Cedar Fair Could Merge with Six Flags

What’s Your Take?
What do you think of a possible Six Flags and Cedar Fair merger? Leave a comment below.

47 Comments

  1. All I can say is I hope if this happens that the Cedar Fair management stays because they seem to make better rides overall and I have recently been upset with some of the decisions made by Six Flags management(Bizzaro at SFNE).

    • while i personaly loved the bizzaro change, i`ll have to agree whith you on the basis that i don`t want the join. the overthrow, yes! but if they join the competition will be over, A.K.A., less reason t add more rides.

    • Like I said with the Texas Giant post, I'm down with the idea of revamping old rides. But, I haven't ridden Bizzaro and I was terrified that they'd ruin a perfect ride. Reviews were mixed, but I don't think too many have thought it was ruined.

      Thanks for the comment!

      • Bizzaro=Great

        • I live just a short bit from SFNE and have ridden Superman every year since it was constructed (some years many many times) and it has slowly changed for the worse in my opinion. There is a huge difference in quality between the original Superman and the current incarnation of the same ride Bizzaro. I know some people may disagree with me but the change in the cars from the adding of the foot restraints after the one person flew off to the current coaster have made the ride much less comfortable. Now this might be based on that I am a 6'-2" and some of the changes are not tall friendly but might work fine for slightly shorter people. Still my biggest complaint with the Bizzaro transition is that they ruined the beautiful views with what are in my opinion basically cheap cardboard cutouts. I used to love as you approached the top of the lift hill how you could look out over all of the valley and if you turned around you could see Springfield in the distance and the new headrests that blare sound have blocked some of those views unless you really try to see them. The other thing is the curve at the far end of the track was one of my favorite moments as you came around along the ground and saw the hills approaching and with the addition of the "theming" they have taken that view. The thing though is that although they took away many things the track is still amazingly designed which is why the coaster continues to get good reviews especially by people who had not previously ridden it as Superman. I just feel they put money and effort into what was a near perfect ride when there was plenty else in the park that deserved to be modified and I don't understand the reasoning.

          • I didn't ride Bizarro before it was Bizarro, but I think it was pretty good.

  2. I think it would be pretty cool if they mergeed. You could get into almost of the the major US parks with one season pass.

    • good point.

  3. The regional amusement park industry is under a consolidation movement.

    A company comprised of former Six Flag properties combined with Cedar Fair parks would have enhanced value. Such a move would allow a consolidator to reduce and/or eliminate pricing wars among parks.

    With the closure of Kentucky Kingdom by Six Flags, rides will likely be available for relocation to other parks, thus lowering capital costs of driving attendance with "new" rides.

    A combined company operating 30+/- parks would create a juggernaut. One must be a fool to think the management of Cedar Fair was unaware of this possibility when negotiating the existing flawed merger deal with Apollo.

    However, a careful reading of the merger prospectus indicates Cedar Fair management and board failed to disclose the possibility of a combined Six Flags/Cedar Fair.

    This failure to disclose such a possibility should cause all unit-holders to pause and consider the integrity of CF Management.

    Cedar Fair management wants it both ways: they insist the future of CF is both bright and bleak. But they can not have it both ways.

    Apollo plans to utilize assets of CF to borrow more money on behalf of the company. From our own lenders. Credit CF management insists is not available to the company.

    How is that possible? The stranger to the bank has a better relationship with our lenders than we do? Is this a reasonable argument?

    CF management essentially proposes to transfer unit-holders quarterly distribution to Apollo: CF is sitting on a cash position of $11.9 million (just $2. million less than previous years close).

    Talk about a redistribution of wealth plan. Money sits idle, unit-holders distributions are suspended, and yet a cash bundle of $12 million will be Apollo's if the deal closes.

    Now the bright future according to CF management: they have negotiated employment contracts granting them a "make-up" 2009 bonus. Then they will collect a second 2010 bonus (see top of page 6 of the merger proxy).

    This gives the appearance of a cash payment to management for having closed a merger. In some instances, this could be viewed much like a bribe.

    CF management assures us they can effectively lead the post merger entity. But how? What will be different? Management must make some adjustments to policies and practices.

    However, management can and should be able to make business model adjustments without the benefit of Apollo. What secret management tools does Apollo have up their sleeves that CF management can not discover for the benefit of current unit-holders?

    Cedar Fair has suffered from the "accountants mentality" in recent years. Management has failed to adopt new strategies to wring additional revenue from the parks. The attitude has been, in large part, do what we did last year.

    Management has failed to innovate. They have spent years counting the same pennies rather than looking for new revenues. Industry improvements tend to be developed by out competitors. Management is reluctant, or slow, to adopt new best practices.

    Following the acquisition of the Paramount Parks, management saved pennies by dropping the licensing agreements for characters. This at a time the public was being ever more driven by "branded" entertainment. Revenue short-falls followed.

    It was a penny wise and pound foolish decision.

    Cedar Fair unit-holders deserve a better management team; one which will look after the interests of the shareholders. A management team which will look well down the road to the future, not a management team with eyes glued to the rear view mirror.

    Management must evaluate the collection of assets at its disposal and significantly increase revenues from those assets. Intellectual, property, and proprietary knowledge and assets must be monetized.

    Failure to disclose a possible Six Flags/Cedar Fair merger is troubling. Unit-holders should pause and ponder management motivation.

    One would not be alone in questioning the veracity of management in this merger recommendation. Independent proxy evaluation firms have advised against this deal.

    Individual unit-holders would be wise to consider this council.

    Management stands to profit from this merger by retaining an ownership position roughly equivalent to that they currently enjoy.

    Management has negotiated lucrative employment contracts with Apollo. Those contracts call for, among other benefits, full bonus payments for 2010 as well as generous future bonuses.

    Using the same yardstick as management has created for its enrichment; they should have been able to negotiate a much richer deal for unit-holders.

    The failure of management and the board to reach premium valuation for shareholders speaks volumes. And the voices are saying, "This sounds fishy. This fails to pass the smell test."

    Unit-holders might be wise to vote this ill-conceived merger down, then clean house of those responsible for the lack-luster performance at Cedar Fair.

    The question for Tuesday's Unit-Holder Meeting is not "is Cedar Fair a valuable collection of assets?"

    Tuesday's question is simply, "Who will own, and profit from, the valuable collection of Cedar Fair assets?"

    • WoW. good point, and i like your comment, very well written… is your job a speechwritter or something?

    • Indeed. Well said!

  4. Even though we wouldn't have to worry about monopolizing the industry, wouldn't you have a conflict of interest here?

    Think about it, all the major Cedar Fair parks are within a few hours of a major Six Flags park. Wouldn't this move discourage competition and innovation?

    Also, now that SFMM has 17 coasters again, would CP and SFMM no longer compete for the "most coasters in one park" record?

    • Very true Vince. Competition is a good thing and regionally there would be very little if this merger were to happen. I'm referring more to ticket prices and such though. I'm not as concerned about the coaster wars. They have to end some day. We're not going to be taking our grandkids to theme parks with 30 roller coasters.

      • I hope we do!

        P.S.-even if most of the competition dissapears, some will still remain, like Knobles-VS-Holiday world, and

        Kennywood-VS-HerseyPark.

      • Point taken, although wouldn't you agree that, if CF would raise their prices, SF would raise theirs too, offering no good alternative other than the privately owned parks? Disney is already over-priced IMO, and for some of us that live up in these cold weather climates, flying all the way down to Orlando in order to escape high ticket prices is not an option. That's why I did a season pass this year, although I can see the positive out of this.

        If the merger does happen, you'd be able to get into 30+ parks in the US, as one poster said above. Also, I wasn't just referring to the coaster wars either, and even though I'd love to see 30 coasters in one park, I was speaking more from a customer basis, meaning the "little things" such as flats, food, staff friendliness, and other things.

  5. There are good sides and bad sides if the merge or don't merge. I really don't think this is going to happen, but if it does, I don't think it will last for long. In my opinion, at least, Six Flags and Cedar Fair parks are very different. Cedar Fair is about themeing and having a great time, whail Six Flags is about huge thrills.

    • Errr… i think you mixed CF with disney.

      • Well, CF has pretty good theming in my opinion.

        • i`ve never been to one of there parks but they say knott`s is the only well themed one.

    • Personally, I prefer Six Flags's management of their parks over Cedar Fair's. IMO, Six Flags does a MUCH better job with theming than Cedar Fair, all Six Flags parks have themed sections (I'm not saying they're all GOOD) and most of Cedar Fair's don't. Look at Kingda Ka, Tatsu, El Toro, Raging Bull, Batman: The Ride, they all have great theming.

      • kk is that sort of ride where you only notice the themeing if you want to, but i get what you mean. tearminator is also well themed.

    • Tom,

      Cedar Fair and Six Flags parks are in the same "genre" – limited theming, big thrills.

      • I meant more of or less of. Not does or doesn't.

        • Got it.

          • i agree whith O. Lee

  6. The major con to all of this news is that the competition, the race to have the bigger, better, faster rides would pretty much cease. While this race pretty is pretty much over, it would leave NO chance of these two ever trying to claim the top amongst parks again.

    Of course, the pro would be that Six Flags parks would finally start getting big rides again, and not replacing certain people's FAVORITE ride with a Thomas Town….. I'll be holding that grudge for the rest of time (seriously Six Flags, why?)…

    P.S., the Austin above me is a different guy. Unless I wrote that in my sleep. But yeah, I'm the TPS writer guy. Guess I need to think of a nickname for myself….

    • How about Texas Man, after the city there?

    • how about he get`s a new nickname, you were hetre first.

    • Haha, that "Austin" is me. Usually I write here as MarvelMaker, but for whatever reason I decided to use my real name. I'm not trying to impersonate you 🙂

      • ahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh. oops, fell aslepp on the coputer…zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz… oh, oops! didi it again.

        • i was just saying "oh, now i get it." i got a little carried away whith the H's( 🙂 ) deletemy coment if you want.

          • ???

          • i was talking to CC.

  7. THE POSITIVES: Season passes, Season passes, Season passes.

    THE NEGATIVES: Less focus on individuality and if the whole congloberation goes bankrupted one day, or we have a major economic meltdown in the U.S., then multiple parks or the who thing TANKS AND CLOSES ALL THE PARKS.

    (Remember, there is something 'safe' when things are managed independantly, but then again, it hasn't been that way in years for many parks.) We live in the "Wal-Mart" generation of things. So there are good and bad attributes to this posibility.

  8. sorry, that should have read, "whole thing" and not "who thing." my bad.

    • don`t be. same thing happens to me all the time.

  9. My concern about Six Flags and Cedar Fair merging is the absence of competition in some really great US markets including LA, San Francisco, New York/Jersey, etc. And it isn't just about the lack of competitive motivation in building new and cooler rides but snoozing on guest service, park cleanliness, and the other soft elements of what makes a terrific Guest experience.

    In my opinion, I would like to see changes in leadership at both companies, especially Six Flags. There is so much opportunity to get it right and provide Guests with a memorable park experience with a good perception of value (it does not have to be "cheap" to generate value).

    Thanks!

  10. They belong seperated. Some of the best themed coasters may have to be re-themed to whatever the merged company will host. Six Flags has DC and Loony Tunes. Cedar Fair/Apollo has Peanuts. Disney now also has Marvel (sort of). This merger deal will not last. And Apollo will ditch Cedar Fair when they open up their eyes and see that the Cedar Fair/Apollo deal will be broken by August!

  11. This merger deal may already be done for.

    Contrary to the Company position, a Unitholders Meeting was held on Tuesday, March 16th, on the sidewalk in front of the Sandusky State Theater.

    See story and Minutes of Unitholders meeting here:

    http://www.sanduskyregister.com/articles/2010/03/

    The assembled Unitholders duly convened and then adjourned the meeting, conducting no other business. Perhaps Cedar Fair management is unclear as to the duty to conduct a meeting. A reading from the New York Times Deal Book may assist them and provide council:

    http://dealbook.blogs.nytimes.com/2010/03/16/ceda

    Of particular interest would be the following quote from that analysis:

    "The limited partnership agreement appears to allow both unit holders and the general partner to adjourn the meeting. However, an adjournment by unit holders would have required a vote, while an adjournment by the general partner would be scrutinized by the Delaware courts under the case of Mercier v. Inter-Tel and possibly found without a compelling justification."

    In any event, the results of the Sidewalk Unitholder Meeting is quite telling, Unitholders convened the announced meeting, and voted without opposition, to adjourn.

    Management must take this action as a vote of no confidence by Unitholders.

    Management expressed its complete contempt for Unitholders when they bared them from assembly inside the warm lobby of the Sandusky State Theater. Management left investors out in the cold.

    Never mind the Company had utilized Unitholder funds to rent the Sandusky State Theater from 7:00 am til 1:00 pm. Stacy Frole refused admission. To space we had payed for.

    Stacy Frole is the director of Investor Relations. And that was the best she could do. Make elderly folks stand out in the cold. Ms. Frole acted under the color of police enforcement.

    This fell on top of another of her "best I could do" episodes of putting a press release out less than 12 hours prior to the meeting.

    At this point several salient questions must be asked:

    Why is management so hell-bent-for-election on pushing a merger Unitholders clearly do not favor?

    Why is management so reluctant to face Unitholders?

    Why is management working so hard to discredit itself with her owners?

    Why has management structured the merger deal to enrich itself at the expense of Unitholders?

    Why does the merger agreement protect, with an employment agreement, only one Park General Manager–Mr. Kinzell's son?

    Why has management abandoned the task of managing the properties to maximize revenues?

    Why should Unitholders consider the continued employment of Kinzell and other executives given the grave mistakes, missteps, and misjudgments of the past two years?

    Again, the question for Unitholders is not "Is Cedar Fair a collection of valuable assets?"

    Rather the question for Unitholders is simply "Who will own, manage, and profit from, the valuable collection of Cedar Fair assets going forward?"

  12. Apollo's still trying to get the Cedar Fair stockholders to agree with the pricing. Some holders say that Apollo is being cheap and that the deal won't last much longer.

  13. Will the Cedar Fair Apollo proposed merger complete?

    It is difficult to say if the deal will consummate.

    Much depends upon the actions of the two big funds which hold approximately 27% of the shares. If they push for inclusion, via equity in the new Apollo controlled entity, it is possible they could garner the votes for it to pass.

    But then, again, Apollo could fail. For those who still doubt savvy money thinks this is a stinker of a deal for Unitholders–look at the position the Knott family has taken.

    The Knott family is on record as opposing the deal. These are folks adept at financing and running large resort parks. If they feel it is a bad deal for them, you can count on it being a bad deal for you.

    The Knott family controls more than 3% of the Cedar Fair Units.

    Given the small Unitholders disgust towards management, I think this deal may very well be scuttled by a "no" vote.

    No voting will not be enough. Unitholders must then take strong action to rescue CF from the entrenched management and board.

    For CF to prosper Kinzel must be sent packing. It is likely CF would not be in the position it finds itself in today had Kinzel retired, AS WAS PROMISED, shortly after the Paramount Parks acquisition.

    What CF needed then, and desperately needs now, is a forward looking CEO and Management Team. The "accounts mentality" must be swept from the executive offices.

    Unitholders and the company need leadership on pricing, product, and promotion. Leadership which has been absent under the likes of a past-his-prime and past-his-retirement-date Kinzel.

    You can bet your Units Apollo is planning for just such a redirection in the actions in the executive offices.

    For Unitholders to be rewarded they must maintain control of the company and make the necessary changes in the executive suite.

    • i dindn`t know about thew knotts family owning parts of the theme park.

  14. Glad to know that, based on the Six Flags Fan call, the merger is completely untrue.

    • well, i havn`t had any funatic emailsa in a while. may be they`re contemplating it.

  15. Cedar Fair announces merger agreement with Apollo terminated.

    CEO Dick Kinzel stated, ” We are honored and excited by the opportunity to continue to manage and operate Cedar Fair…”

    Mr. Kinzel you would be wise not to get to excited, or make any long term plans, for your future at Cedar Fair. Your tenure is up. Unitholders are simply going to have to let you go.

    As to the Cedar Fair party line concerning the $6.5 million fee to Apollo–it is not, as has been characterized, a “reimbursement of expenses.” It is foolish of CF to make this payment to Apollo.

    Smart money would have made Apollo bring suit in an effort to collect this excessive remuneration. This is yet another marker for managements missteps, misjudgments, and misdirection, of resources.

    Unitholder defeat of the flawed merger agreement is but the beginning. Now the real Unitholder work begins: cleaning up the executive suite.

    It should also be apparent management no longer has the “required level of investor support” to continue much into the future. That would account for why they paid Apollo $6.5 million to exit the deal before the scheduled Unitholder Meeting Thursday.

    By canceling the vote Mr. Kinzel and management avoid facing the company owners, who, as the story points out, planned to pack the Sandusky State Theater.

    No doubt they would have called for big changes in the executive suite.

    This is yet another delay tactic devised by an ineffective leader.

    Put off facing Unitholders tomorrow. However, lacking the support of your owners, your days are numbered.

    The Unitholders have mutinied. Owners have delivered a resounding vote of “no confidence” in management.

    Now is the time, in the coming critical season, to radically improve revenues. Kinzel and his management team have shown they do not have the necessary skill set to accomplish this task.

    Unitholders must demand immediate changes which will deliver the talent to lead the company into the future. Not dwell in the past.

    Exit gracefully Mr. Kinzel, make way for forward looking leadership, or risk being thrown overboard by your Unitholders.

    Kinzel and company must know the ride is now over for them

    Time to do what should have been done following the Paramount acquisition–retire Kinzel. But for the various mistakes and myopic vision of Kinzel CF would not find itself in the precarious situation it is in.

    The way to fix the problems is to fix management. Even Apollo got that right.

    Out with the old, in with the new.

    Unitholders your real work has just begun. Time to reform the board and management suite at CF.

  16. the appalo deal broke. Knott's owners said no, but apallo is still after six flags.

    http://articles.latimes.com/2010/apr/07/business/

    • err… CC, did you disable the aweaiting moderation thing, i didn`t have to wait.

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