News SeaWorld Makes $3.4 Billion Takeover Bid for Cedar Fair

[Mushroom]

I read in one of the articles posted here earlier from the motley fool is that CF has more than $3 billion in debt it's trying to pay down and hasn't had a distribution to shareholders in 23 months and doesn't plan to continue distributions until the debt is paid down. I can see CF selling some of the less profitable parks to SEAS to pay down this debt faster. As Zachary mentioned these would be the parks that SEAS can then develop further for higher profits. I don't know how much more profit you could squeeze from Cedar Point or Knott's Berry Farm (as previously mentioned).

Cedar Fair Announces Full Redemption of All Outstanding 5.375% Notes Due June 2024 - Cedar Fair

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and immersive entertainment, announced today a full redemption of its 5.375% Notes (the “Notes”) due June 2024 issued pursuant to an Indenture (the “Indenture”) dated as of June 3, 2014.

www.cedarfair.com

Thanks for pointing that out. I bet that debt is, at least in part, a result of CF's decision not to furlough its full-time employees during the pandemic and to delay the reopening of its parks in 2021.

That said, to offer some more context to everyone, debt isn't uncommon or even necessarily bad, especially in this industry. SEAS itself has about $2 billion in debt. CF has a legal obligation to pay off its debts before it can pay distributions to shareholders, but this is super common, and companies often intentionally maintain some level of debt for tax benefits. SEAS also does not pay any dividends to its shareholders at the moment.

Like @mwhinva said, the real question is whether a supermajority of CF shareholders believe the $60 cash SEAS is offering is more than the present value of what CF's shares will be worth at any point in the future.

 

[rswashdc]

How do you squeeze more profit? Easy. Let's take Knott's. That old, but intricately themed, mine ride and log flume? Yeah, slash that maintenance budget. Nobody notices theming. That awesome house made fried chicken? Yeah, I'm sure Sysco makes something just as good, right? That's what SEAS will do if the current management takes over, and why, as a CF passholder and shareholder, I am vehemently against this buyout attempt.

I think the easier places to squeeze more profits will be things such as raising prices on season passes, probably a lot, and adding blackout dates. The gold pass, and frankly gate prices, for a park such as Cedar Point are IMO way under what the market could support - basic prices with blackout dates should probably be upwards of $150 or more. KD or Knotts in a multi-park pass with BGW and SWSD respectively can support much higher prices than any of those parks charges today.

 

[Zachary]

So I wanted to actually look at how much price flexibility SEAS may think they have with the Cedar Fair Parks. That means it's time for more charts.

The charts below include ticket prices for admission that is valid for any day during the 2022 season.

The passes represented in the charts below are the cheapest season-long or 12-month-long option that includes parking and doesn't have blackout dates.

Costs in parenthesis note the current sale/online price of the product in question. In the case of most of the SEAS parks, their discounts vary by day so I tried to capture the "normal" ticket price during the current sale.

The majority of the SEAS parks are listed as "Year-Round-ish" due to their weekend-only, often partially operating, offseason statuses.

All of the parks that are open for Christmas include their Christmas events with the passes listed in the charts below.


Cedar Fair Dry Parks

Park​	Operating Calendar​	Water Park​	Halloween Event​	Ticket​	Pass​
California's Great America	Mid-Mar — Oct + Christmas	Included	Included	$70 ($40)	$89
Canada's Wonderland	May — Oct + Christmas	Included	Included	($40)	$110
Carowinds	Mid-Mar — Oct + Christmas	Included	Included with Pass	$75 ($50)	$125
Cedar Point	May — Oct	Included with Pass	Included	$85 ($45)	$135
Dorney Park	Mid-May — Oct	Included	Included	$70 ($35)	$99
Kings Dominion	Mid-Mar — Oct + Christmas	Included	Included	$75 ($42)	$99
Kings Island	Mid-Apr — Oct + Christmas	Included	Included	$85 ($45)	$135
Knott's Berry Farm	Year-Round	Included with Pass	Not Included	$99 ($59)	$160
Michigan's Adventure	End of May — Sept	Included	N/A	$50 ($35)	$79
Valleyfair	Mid-May — Oct	Included	Included	$60 ($32)	$89
Worlds of Fun	May — Oct + Christmas	Included	Included	$65 ($35)	$99

SeaWorld Parks Dry Parks

Park​	Operating Calendar​	Water Park​	Halloween Event​	Ticket​	Pass​
Busch Gardens Tampa	Year-Round	Not Included	Not Included	$118 ($90-ish)	$198
Busch Gardens Williamsburg	Year-Round-ish	Not Included	Included	$94 ($80-ish)	$198
SeaWorld Orlando	Year-Round	Not Included	Not Included	$118 ($90-ish)	$198
SeaWorld San Antonio	Year-Round-ish	Included	Included	$81 ($70-ish)	$111 ($96)
SeaWorld San Diego	Year-Round-ish	Not Included	Not Included	$100 ($85-ish)	$147
Sesame Place Philadelphia	Year-Round-ish	Integrated	Integrated	$90 ($50-ish)	$180 ($149)
Sesame Place San Diego	Year-Round-ish ()	Integrated	Integrated	$80 ($60)	$129

If you notice any issues with the charts above, please let me know! I think I got it all right, but it's a lot of information to juggle!

 

[Zachary]

One of the coolest things I think the charts I posted above reveal is how dramatically local competition seems to impact SEAS park pricing. The only major SEAS park's pass that can be purchased for anywhere near the average-ish price of a Cedar Fair park pass ($111) is SeaWorld San Antonio's despite the park's recent shift to a very aggressive cap-ex strategy and the fact that SWSA's pass includes both an adult Halloween event and their local water park, Aquatica San Antonio. I guess this is what happens when you have FUN, SEAS, and SIX all clustered in one market. This really seems to highlight the importance of regional dominance over a market for a higher-priced chain like SEAS.

 

[Dogface]

Tin foil theory: SeaWorld really just wants Geauga Lake back so it can reclaim the Midwest /s

 

[ControlsEE]

Welcome to SeaWorld Ohio! Lol, I think if they wanted it back, they should have made an offer for just that park, not the whole chain

 

[mikes]

Tin foil theory: SeaWorld really just wants Geauga Lake back so it can reclaim the Midwest View attachment 25823/s

I know you are just joking, but I thought cedar fair already sold off the property to a devleoper

 

[horsesboy]

I know you are just joking, but I thought cedar fair already sold off the property to a devleoper

They sold off some the rest is still a pending sell at least as of the fall.

 

[Jonesta6]

I mean, if the market could support a small park of some sort - CF does operate a sports park and other things that aren't explicitly a theme/amusement park.

That may be the perfect place to stick a campground with ATV/dirt bike courses, maybe some mountain bike trails and some zip lines. Nothing too big that'd take market share from their existing enterprises, and could get them back in the good graces of locals.

Of course, SEAS may not be interested in that idea...

 

[mtorange]

Woah. According to this article, Cedar Fair being bought out is now considered a “strong possibility,” and there is speculation that multiple companies may want to buy the chain.

The SeaWorld Buy Out Of Cedar Fair Just Took An Interesting Turn

There's been another development.

www.cinemablend.com

 

[Gavin]

Stock hit a high of $62 today.


Rest In Pieces Cedar Fair.

 

[Darkoastie]

What would a total or partial sell of cedar fair look like in terms of time line ? Like how long before a branding change season passes etc etc

 

[ControlsEE]

What would a total or partial sell of cedar fair look like in terms of time line ? Like how long before a branding change season passes etc etc

I mean would there need to be a branding change? When Blackstone took over the BEC parks, they didn't rebrand everything as LegoLand (or anything else for that matter) even though they also owned Merlin Entertainment (who runs the legoland parks). They kind of kept the chains seperate until the SEAS IPO. I understand that these are different circumstances, but couldn't SEAS do the same? It's not like the SEAS brand already has multiple brands under it (SeaWorld, Aquatica, Busch Gardens, SesamePlace, WaterCountry USA, Discovery Cove). Maybe they should just change their corporate name and leave the parks alone. Of course, I'm also a fan of SEAdar Point, Knotts Berry Gardens, and Shamu's Dominion/Island (which, ADHD side track here, why is it called Island when it is in Cincy?)

 

[mtpelepele]

It came from the Cincinnati park Taft bought, closed, and moved, Coney Island, which in turn took its name from the New York park.

 

[tursiops]

I think if a purchase of all parks keeping them somewhat separate makes sense, but any individually purchased parks could be fully integrated, even if names don't change.

 

[CoasterAuditor]

Yeah can we keep private equity firms all the way out of Cedar Fair?

 

[horsesboy]

Stock hit a high of $62 today.


Rest In Pieces Cedar Fair.

I mean that could mean anything from SEA shareholders are buying up stock cause they think the deal is good for SEA they want a vote to help push the deal through to a group of park enthusiasts who believe that the deal is bad for the average park goer and are buying up stock to Jack up tge price and try and kill it.

 

[mwhinva]

If the units are now worth $62 and the initial SEAS offer is $60. Then that offer is DOA.

I thought I read a Seeking Alpha blog (though, it could have been another source) stating there was an investment firm that owns 5% of CF units. They were open to selling to the highest bidder and wanted CF management to open the potential sale up to other offers that might be out there. Course, CF needs another 62% of unit holders to go along with that to push a deal through.

I'm not stating SEAS is out; but, they could possibly be forced out if better offers are out there.

 

[Mushroom]

I would much rather an outside investment firm buy CF than SEAS or another theme park company. Such an acquisition might keep CF’s existing management in place rather than making the CF parks fall in line with another theme park company’s operational philosophies, and the difference might be minimal on the consumer end.

 

[b.mac]

I would much rather an outside investment firm buy CF than SEAS or another theme park company. Such an acquisition might keep CF’s existing management in place rather than making the CF parks fall in line with another theme park company’s operational philosophies, and the difference might be minimal on the consumer end.

The interesting thing I'd like to point out is that any of the acquisitions (potential and actual) that Cedar Fair has been apart of in the past have largely been very welcoming to the current management. When Cedar Fair bought Paramount a large amount of their corporate management stayed when under normal circumstances they would've been let go. When the initial Six Flags offer came through in 2019 the deal was more in line that the Cedar Fair board would remain and retain a large amount of control over the whole "Cedar Flags" chain while the existing Six Flags board would've been downsized and then merged.