Acquiring Amusements

One of the country’s largest theme park operators has agreed to an acquisition by private equity firm Apollo Global Management.

Ohio-based Cedar Fair, which owns 11 parks including Ohio’s Cedar Point, California’s Great America and Knott’s Berry Farm and Canada’s Wonderland in Ontario, is set to hand over its holdings for roughly $635 million.

The agreement follows Anheuser-Busch InBev’s recent sale of 10 theme parks including three SeaWorlds and two Busch Gardens locations, as well as the bankruptcy of Six Flags Inc. earlier this year.

Cedar Fair stockholders are expected to receive $11.50 per share in the deal, which has apparently raised a few eyebrows.

Hilliard Lyons financial consultant Jeffrey Thomison told the Sandusky Register, where Cedar Fair’s headquarters are located in Ohio, that he’s not convinced the offer will receive the support of two-thirds of the company’s shareholders.

The price “seems a bit low,” Thomison wrote in a report, predicting that if the company remains public, rising cash flows and declining debt could lead to a price in the upper teens next year.

Besides facing a vote and regulatory approval, the agreement could also be subject to litigation.

A firm in New York is reportedly investigating the deal to uncover “whether the directors of Cedar Fair LP may have breached their fiduciary duties by not acting in Cedar Fair shareholders’ best interests”, and whether “the company may not have adequately shopped itself around before entering into this transaction,” a statement said.

Cedar Fair announced in November that attendance at the company’s parks had decreased by 1.2 million visits compared with the same period in 2008.

CEO Dick Kinzel told the Register the company has considered a “wide range of strategic alternatives” over the years, and taking the company private will ultimately better serve employees and visitors to the parks.

“We have about $90 million planned for capital next year across our 11 properties,” Kinzel said. “None of that is going to be disrupted.”

In other amusement news, a bankruptcy judge in Delaware ruled that creditors of Six Flags could not file a competing reorganization proposal while the theme park attempts to win approval of its own proposal, Bloomberg reported.

The company is attempting to finance its way out of bankruptcy through loans and a stock sale.