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b.mac

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May 14, 2011
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This rumor has been making its rounds through Six Flags for quite a few years, and Texas Thrill Seekers seems to be the first public personality to talk about it.

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The funny thing is that Six Flags over Texas, Six Flags over Georgia, and Six Flags St. Louis are not currently owned by Six Flags themselves, and are still owned by Time Warner. As apart of a buyback agreement from the 1990s, Six Flags (at the time Premier Parks) agreed to pay Time Warner a portion of those three park's revenues to buy back the parks. As apart of the agreement, SFoT, SFStL, and SFoG are required to have a certain minimum amount of investment from Six Flags as apart of the operations buy back agreement, and Time Warner regularly audits all three parks to ensure Six Flags is holding up their end of the deal. The buyout is supposed to be complete sometime in the early 2020s, I believe around the time this rumored buyout from Herschend is supposed to happen.

As to the buyout rumors themselves, I don't know much about which parks are exactly involved. So while Herschend could buy SFoT, they don't necessarily have to buy SFoG or SFStL.

EDIT: I should remind all of you to take this with a pile of salt the size of Kingda Ka.
 
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b.mac

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So does that mean those 3 could actually spin off and become independent?

It does not. As the parks are in the purchase agreement between Six Flags and Time Warner. When the agreement is done and fully paid off Six Flags will fully acquire the properties without having to answer to the original investors, Time Warner, or Zarbon the Incorrigible.

What this stated "rumor" misses is the detail that until that agreement is satisfied, any negotiations about acquiring any of those properties requires Time Warner to be present.
 
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b.mac

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My biggest concern is the alleged $5 billion dollar price tag for 3 parks.

To compare, Cedar Fair paid $1.2 billion dollars for the 5 Paramount parks just 13 years ago.

And SEAS was valuing the Busch parks and their neighboring water parks for $1.1 billion.

I understand some of the Six Flags parks make some serious money but I have a hard time believing any 3 parks in the chain combined breaks $2 billion.
 

b.mac

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Update:

Apparently discussions are happening but nothing to seriously look into or discuss about. Herschend has been tossing offers at Six Flags and SEAS for almost 10 years now seeing if either company will bite and in all honesty I think the discussions are just a "Plan B" in case anything goes wrong. They obviously have not been offering the $5 billion price tag that has been tossed around.

Texas Thrill Seekers (and a bunch of people both supporting and contradicting the leak) have quite a few details out of place about it but have also somehow nailed other ones, this of course was before they went from double to quadruple downing in a response to completely retracting the rumor.

Anyways key details:
  • Six Flags is currently holding about ~$2.1 billion in debt, which contradicts Texas Thrill Seeker's claim of $3+ billion.
    • I don't know why Herschend would want to burden themselves with part of that debt, let alone all of it just to acquire 3 parks especially since Six Flags has been doing pretty solidly until this last quarter. The whole reason why SF fell flat in Q4 was due to severe weather completely ruining SFoT's winter season, and adversely affecting events at a few other parks as well. The fact that they came out slightly down is pretty amazing actually.
  • The buyout agreement for Six Flags to fully own their original properties is 2027-2028, not in line with the rumored purchase timeframe.
    • This means that any sort of buyout agreement involving SFoT (complete 2028) or SFoG (complete 2027) must involve Time Warner as they are legally the owners of both properties.
    • The original investors are not involved with the company anymore, as Time Warner fully acquired the parks in 1993.
    • Premier Parks purchased Six Flags in 1998, but apart of that deal was entering a managerial buyout agreement with Time Warner over the "partnership parks."
    • As apart of this agreement, Six Flags must invest a certain amount annually into both parks, and meet a bunch of other minor details in order to satisfy the agreement between Premier and Time Warner.
    • This agreement is supposed to be available publicly.
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What this sounds like to me:

Herschend things the only reason SF is investing in those 3 parks is due to the agreement, and Time Warner isn't making as much money off of it as they want. So they jump in there with the idea of buying the parks, and doing it early means that TW can get one more payout from these parks, and SF doesn't need to invest in them.

But I have heard for years that they have asked about parks including: BGW, BGT, HP, Lake Compounce, Knotts pre-CF, Kennywood.

I do think that Herschend is ready to expand some and starting to move out. I think that they are good for the business because they have the same attention to detail and theme elements that AB/Inbev once had in their parks.
 

Shane

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This really would explain the on again off again acquisition rumors of SEAS by Herschend. It doesn't surprise me that every couple of years they toss a figure to competitors and see if they are interested, then nothing comes of it.
 

b.mac

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This really would explain the on again off again acquisition rumors of SEAS by Herschend. It doesn't surprise me that every couple of years they toss a figure to competitors and see if they are interested, then nothing comes of it.

Mostly because SEAS is that non-savvy selling on Craigslist stating "No lowballers, I know what I got."

Which really, they kinda do.
 
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