Last week, we witnessed a little bit of “history in the making” for the theme park industry, as a merger deal is in motion between Six Flags and Cedar Fair. If you’re suffering from deja vu, it might be because a similar deal was discussed back in 2019. That episode resulted in Cedar Fair turning down a $4 billion purchase offer from Six Flags. Despite this history, Cedar Fair and Six Flags have now agreed in principle to an all-stock merger deal between the two theme park giants.
On the corporate side of things, Six Flags and Cedar Fair have approved their respective terms of the deal. It will now just need the approval of the Six Flags shareholders and the typical government regulatory approvals. It was also noted that approval by Cedar Fair’s unitholders was not required. This is probably due to the setup of Cedar Fair as an LP and not a typical corporation. The merger is expected to be completed sometime in the first half of 2024.
This has all been quite a shocker to everyone. So, before I talk about the various possibilities, both good and bad, let’s take a quick look at what we know to be true about the future of the merged company.
Six Flags & Cedar Fair merger: what we know so far
Once combined the entire chain, with an estimated value of $8 billion, will operate under the Six Flags corporate name. It will trade under Cedar Fair’s “FUN” ticker symbol and be structured as a C Corporation.
The corporate headquarters will not lie in Sandusky or Dallas. Instead, they will be run out of Charlotte, North Carolina. Meanwhile, “significant finance and administrative operations” will still be run out of Sandusky, Ohio. So why Charlotte? While Cedar Fair’s traditional HQ has always been in Sandusky, Ohio, much of its corporate operations have been run out of an office in Charlotte for many many years now.
I’m pretty sure this is the same office it inherited when Cedar Fair purchased Paramount Parks in 2006. Paramount’s HQ was in a Charlotte business located minutes away from the Carowinds theme park.
New corporate structure
Cedar Fair president & CEO, Richard Zimmerman, will become the new president and CEO of the combined company. Meanwhile, Six Flags president & CEO, Selim Bassoul, will transition into the executive chairman of the new combined Board of Directors.
Cedar Fair’s current chief financial officer, Brian Witherow, will serve as the CFO of the combined company. Six Flags’ current CFO, Gary Mick, will serve as the chief integration officer of the combined company. The new combined Board of Directors will consist of 12 members. This includes six from Cedar Fair’s current Board and six from Six Flags’ current Board.
Under the terms of the agreement, Cedar Fair’s unitholders will receive one share of common stock in the new combined company for each current unit owned. Six Flags shareholders will receive .58 shares of common stock in the combined company for each share owned. Once finalized, Cedar Fair’s current unitholders will own approximately 51.2%, and Six Flags shareholders own 48.8% of the combined company.
The combined company will have access to the IPs of the two companies to draw from as it creates new attractions, themes and characters in the theme parks. This includes Looney Tunes, DC Comics and the Peanuts characters. It also expects $200 million in “annual synergies” between the two companies. There is an estimated $120 million in cost savings being anticipated within the first 24 months.
As things stand today, the combined chain of theme parks will feature a total of 42 park gates including 27 amusement parks and 15 water parks, as well as nine resort properties across the US, Canada and Mexico. Over the past 12 months, Cedar Fair and Six Flags combined have entertained 48 million guests across their properties.
What does this merger mean?
Now that I’ve got all the official information out of the way, let’s dig into the ideas, fears, and questions that I’m sure many of us are having right now. For those wondering, my initial reaction to this news was utter shock and the utterance of, “They can’t do that!”
I even suggested that the combined mega-chain might be large enough to trigger government oversight or Antitrust Laws. These are in place to “protect and promote competition within all sectors of the economy”. They “protect consumers from predatory business practices and ensure fair competition”.
However, having had time to look things over, I don’t think that will be an issue for the proposed merger. I drew up my own map of the various park properties across North America. In my head, I was thinking that surely there would be some major areas of overlap. Yet there actually are very few places where Cedar Fair and Six Flags operate within the same market.
Competition in California
California is one place where the combined company will now operate both Six Flags Magic Mountain (and Hurricane Harbor) as well as Knott’s Berry Farm (and Soak City). These are located just 60 miles apart.
However, these two properties also have to compete against Universal Studios Hollywood, Disneyland and Disney California Adventure within the immediate area, as well as Legoland California, SeaWorld San Diego, Sesame Place San Diego and the San Diego Zoo about a 90-minute drive to the south.
In central California, the combined company will also operate Six Flags Discovery Kingdom in Vallejo and a stand-alone Hurricane Harbor waterpark in Concord. For up to the next 10 years, it will also run California’s Great America in San Jose. For those who don’t follow the news about CGA, Cedar Fair sold the park property to a new owner. It has agreed to close the park within the next 10 years.
Texas parks
The Texas landscape will now be dominated by the combined Six Flags chain. It will operate Six Flags over Texas and Hurricane Harbor in the Dallas/Ft. Worth area, Six Flags Fiesta Texas in San Antonio, Hurricane Harbor Splashtown just north of Houston, and the two Schlitterbahn waterparks in New Braunfels and Galveston.
The only remaining strong competition in the Texas area will come from SeaWorld San Antonio. However, in the next few years, we will also see Universal open a small park just north of Dallas. Merlin will also be opening a small Peppa Pig micro-park, again in the Dallas area.
My initial reaction was that the combined chain probably has too many water parks in Texas. But I’ve also visited the state and know that Texas is hot as the sun in the summer and is jam-packed with small waterparks everywhere you look. So, this may not be a problem after all. That said… if a park has to close or be sold off, my money would be on Hurricane Harbor Splashtown.
Potential closures dues to Six Flags & Cedar Fair merger
In terms of closures, my only major concern may be for the future of Six Flags America. Attendance has never been that great at this particular park. Operations have frequently been problematic with a few security issues over the years. And, despite sitting on a large piece of property, growth opportunities are limited due to building restrictions.
The surrounding area is primarily residential developments as well as being located next to the Belt Woods National Environment Area. This is a 625-acre forest protected as a National Natural Landmark by the state. With the park being located in a region where it competes against Kings Dominion to the south, Dorney Park to the northwest and Six Flags Great Adventure to the northeast, the combined chain could possibly be convinced to sell the property to developers.
Management differences
I do have a few other concerns however where some differences may arise between management philosophies between the two companies. For example, Cedar Fair has always been opposed to operating parks with animals. In the past, when it purchased a park that had animal shows, those were shut down.
While Six Flags isn’t known for animal parks, it does operate Six Flags Discovery Kingdom in California. This is home to land and marine animals. There is also a Safari animal area within Six Flags Great Adventure. Considering that Six Flags has been investing in both of these areas lately, I’m assuming this will continue for the time being.
The other possible conflict may arise over hiring themselves out as a management company to operate parks for other owners. I do not believe that Cedar Fair does this. Meanwhile, Six Flags is currently operating several small parks for other owners, including Hurricane Harbor Rockford (IL), Hurricane Harbor waterpark in Concord (CA) and Six Flags Darien Lake (NY), as well as Frontier City and the nearby Hurricane Harbor waterpark in Oklahoma.
While the combined company will likely finish up its current contracts, I’m curious to see if it would renew these deals, opt out, or possibly even make an offer to purchase some of these properties outright.
Complex relationships
Another interesting item is the future of Six Flags over Texas and Six Flags over Georgia. The ownership of those two original Six Flags properties is a bit complex. A Texas Limited Partnership group owns Six Flags Over Texas, and Six Flags Entertainment itself currently owns 54% of that group, with the remainder said to be owned by Six Flags Over Texas Fund, Ltd (a private equity and asset management firm).
On the horizon, Six Flags Entertainment Corporation will have a rare option to purchase the remaining 46% ownership stake for the Six Flags over Texas property when the current lease expires in 2028.
Six Flags Over Georgia also currently exists in a similar relationship with a set of partners in Georgia for that particular property. A window to purchase 100% ownership in that park will also open when that lease expires in 2027. Six Flags by itself may have struggled a bit to fund those purchases back-to-back. However, I feel fairly confident that the combined giant will have the resources to obtain full ownership of both properties when each becomes available.
Day-to-day operations following the Six Flags & Cedar Fair merger
In conclusion, I’m a little more confident in how this could turn out moving forward. There will be less competition for the consumer of course, which could result in some increased prices. Plus, the various ride vendors are not going to be happy. That’s because the merger will bring an end to the long-standing thrill ride cold war between Six Flags and Cedar Fair about who has the biggest, fastest, tallest, and any other “-est” you can think of.
As for Selim Bassoul’s placement as Chairman of the Board, this is the best place for him. He has less experience in the day-to-day operations of theme parks, but a lot of experience in the boardroom setting the vision and overall direction for the company. In the end, Bassoul is likely going to see his vision of upgrading the Six Flags experience come true. He was once reported as having said he wanted the Six Flags park experience to appeal more to Target customers and be less like Walmart.
If Six Flags is considered the Walmart of the theme park world, then Cedar Fair is most certainly the Target of the industry. With Bassoul in the boardroom, Cedar Fair’s Zimmerman will continue to run the big show and deal directly with the park presidents to see to it that everything runs smoothly.
From this point of view, I think this is the best corporate structure that we could hope for right now as the two chains move forward together into the future.
