News: SeaWorld Entertainment reportedly making bid for Cedar Fair

Joe E said:

For reference the SIX offer was $70 a share or $600mm more and they rejected it (not even put to vote). Obviously there is some more debt this time but the Market cap/ stock price during the SIX offer is around the same (even before todays jump) so on paper this offer might not even be as good .

The big difference is the Six Flags offer was mostly a stock-for-stock trade, whereas this SeaWorld offer is cold hard CASH MONEY. Money talks and bullish!t walks. Aside, there has to be a cheaper way for SEAS to revive SeaWorld Ohio.

The offer is not even in the ball park, complete low ball at $60/share or 3.4B. 1)Cedar Fair's price target by analyst is $66/share

2)there are tax advantages to the MLP structure of Cedar Fair for unit holders,which require a premium to any offer for unit holders

3)CF will be bringing back a dividend, something SEAS ended 6 yrs ago & have no desire to bring back.

4)As a MLP 67%( super majority) of unit holders must approve.

5)Cedar Fair is coming off a record Q3, expect the same for Q4(prelim results thru Oct 31st were records on revenue & per caps). CF has no reason to take anything but an amazing offer, not a low ball offer. Serious offer starts at 4.5B, actually 5B+ starts to be enticing a little (10X EBIDTA normalizing to 2019). CF given the strong performance in Q3 that exceeded 2019 Q3 feel they are on a great trajectory. They produced a great Q3 with small parks closed 2 days/week & Wonderland impaired by Ontario restrictions.

Hopefully Cedar Fair will be smart and NOT sell. If everyone remembers the Six Flags of Ohio/Geagua Lake debacle, the Sea World animals were the very first thing that Cedar Fair discontinued when they bought the property in Aurora.

Is FUN still organized as a publicly traded limited partnership? When it was Cedar Fair LP, this structure was implemented to ward off hostile takeovers.

DA20Pilot said:

Is FUN still organized as a publicly traded limited partnership? When it was Cedar Fair LP, this structure was implemented to ward off hostile takeovers.

As far as I know, yes they are. Although just like anything else it could’ve changed over the years, but “probably” unlikely.

Yes Cedar Fair is a MLP. They were allowed to retain that status(grandfathered), after the law changed in the late 80's on whom could form MLP's

^Not to sound dumb, but what's MLP?

MLP = Master Limited Partnership

I don't see this happening! IMO I really believe the number SeaWorld offered them is not the real number I think if things were to get serious then SeaWorld will come back with a higher cash offer to Cedar Fair! I truly think if this did somehow happen it would be a merger of the two companies with Zimmerman overseeing everything! Again I don't think it will happen!

How long did it take for them to review and turn down the six flags offer? Should we expect a similar time frame for this one? I'd guess if they were leaning towards accepting it, it would take longer?

It seems that the Board meets on certain Fridays, just based on the timing of certain announcements, but I don't know how frequently.

--Dave Althoff, Jr.

Hudson said:

How long did it take for them to review and turn down the six flags offer? Should we expect a similar time frame for this one? I'd guess if they were leaning towards accepting it, it would take longer?

I want to say the news that the Six Flags offer was rejected was made public within a few days at most.

Looking at a Reuters article, the offer was made public on 10/2/2019 and Cedar Fair's "thanks but no thanks" to Six Flags was made public just two days later on 10/4/2019.

Seems like such a crazy idea. Cedar Fair seems like such a bigger entity than SeaWorld. I would have thought that CF would be offering to purchase SeaWorld...

Market cap of Cedar Fair is $3.34 billion. SeaWorld market cap is $4.68 billion.

Market Cap is often the poorest metric of a value of a company, look at things like EBIDTA multiples(parks sell for 9 to 12x), Enterprise Value, discounted cash flow, Book value, etc... If you want to see how off a market cap can be to the actual value of company look at Game Stop & all these other meme stocks. Game Stop based on market cap was 30B at its meme high , but they still have the same dying business, massive debt, losing money, etc...They are now still at about 8B market cap & the street values them in a buyout at 2B at most

There is zero chance they are excepting this offer. It's not even in the ball park. Theme parks sell for 9 to 12X EBIDTA, normalize to 2019 EBIDTA of 505M that gives you 4.55B low end to 6.06B high end. . SEAS is literally thinking CF is stupid with this low ball offer. CF has acquired more assets since 2019 & has a bunch of assets just coming on line for 2022 that will produce growth. CF just produced a record Q3 in 2021 with all their small parks closed 2 days per week during the summer, Wonderland limited, Castaways & Sawmill Creek closed for renovations(that's close to 600 rooms they had off line). Beside, the growth coming from getting the 2 resorts running, they have renovations to Schlitterbahn & Knotts Hotel opening in 2022, the sports complexes weren't running full tilt all year b/c of Covid. CF also has revenue growth potential via pricing, they are not close to their max pricing at parks. Contrast that to SEAS, which is pretty close to max with a Platinum pass running close to $500. SEAS wants growth, but they don't really know how to do it or don't want to take the time. They talked about getting more into hotels/resorts but that takes years to build, something CF has been investing in heavily for a decade. SEAS wants to just buy it & not work at it & they tried to get it on the cheap. The offer is not even serious on the numbers.

CED23 said:

Market Cap is often the poorest metric of a value of a company...

Using two companies' market caps is a perfectly reasonable way to quickly compare, certainly so to determine who's "bigger".

If you want to see how off a market cap can be to the actual value of company look at Game Stop...

The GameStop situation is very specific and unique, so has no relevance here, other than perhaps being the exception that proves the rule.

I wouldn't say there is zero chance since it's been a week and nothing has been said.

It could be that the right people haven't all been in the same room (or teams meeting) at once to decide, or it could be that they are actually negotiating.

I think it's just hard (and rightfully so) for most people to imagine Cedar Fair being bought out by another corporate entity, but it almost happened...or at least appeared to almost happen...before (the Apollo deal).

Based off what what I have read from people who actually understand this side of business it does seem unlikely, but certainly not impossible.

Market Cap doesn't mean your company is bigger , already shown the deceptive nature of market cap, It's a poor & often erroneous valuation of a company. Case in point, March 2020, SEAS stock was at $11 (market cap of 860M) & Cedar Fair was $18(1.05B market cap), the same day. Now, SEAS has a higher Market Cap, are they actually a more valuable company in real metrics in 2020 or now compared to CF. You have to look at actual metrics mentioned before to really tell. The fact is CF is a more valuable company in 2020 & now.

Game Stop was an example, I can give you a 200 more examples of the same . if you paid close attention that's why I used the word "meme stocks", there are 100's of them that make no money & will not for years, trade at price to sales, have negative EBIDTA, etc...They are stocks that have are down astronomical %'s(40 to 80%) in the last 6 months & will get crushed even more as the Fed tightens.

Kevinj said:

I wouldn't say there is zero chance since it's been a week and nothing has been said.

It could be that the right people haven't all been in the same room (or teams meeting) at once to decide, or it could be that they are actually negotiating.

I think it's just hard (and rightfully so) for most people to imagine Cedar Fair being bought out by another corporate entity, but it almost happened...or at least appeared to almost happen...before (the Apollo deal).

Based off what what I have read from people who actually understand this side of business it does seem unlikely, but certainly not impossible.

There is zero chance. The offer isn't in the ball park of the value of the company, the offer is what you give a company about to declare bankruptcy, like SF in 2009. It's wholly not serious.

What was going on when Apollo almost happened? CF was heavily leveraged after acquiring the Paramount Parks & the 2008 crash happened soon after & the recession. That's not the situation now. Last fall CF was so confident in their position they pre paid 500M on their note due in 2025. They are coming off record Q3 with several assets closed completely & others impaired. They are not in trouble & this offer is you're going bankrupt soon level of low ball offer.