Six Flags / Cedar Fair Merger Announced

[Hyde]

Six Flags potentially selling some of its theme parks following Cedar Fair merger

Six Flags will conduct a "comprehensive review" of its 42 parks and may sell some of them, just months after merging with Cedar Fair.

attractionsmagazine.com

Guess it's time to start hedging bets...

"potential divestiture of non-core assets" as it reads within the outline.

My immediate take would be consideration for water park and indoor water park resorts, which may have a wider market interest for potential buyers.

For actual amusement parks, this is the kicker - the Six Flags/Cedar Fair merger essentially killed regional market competition (which previous was the two firms competing). Unless there's interest from Herschend, Parques Reunidos, or evermore obscure operators, it's hard to really figure out who would be buying.

 

[Matt N]

Maybe Merlin could buy some, if they wanted to increase their foothold in the US market? The company was said to have been interested in the Busch Gardens parks in the past, so it wouldn’t be wholly surprising to me if they did end up buying other US parks.

Although Resort Theme Parks admittedly aren’t their core growth area, with the size of this division having stayed exactly the same since the Tussauds merger in 2007, so perhaps that pours cold water on that idea…

 

[owenstreet7]

Maybe Merlin could buy some, if they wanted to increase their foothold in the US market? The company was said to have been interested in the Busch Gardens parks in the past, so it wouldn’t be wholly surprising to me if they did end up buying other US parks.

Although Resort Theme Parks admittedly aren’t their core growth area, with the size of this division having stayed exactly the same since the Tussauds merger in 2007, so perhaps that pours cold water on that idea…

That would be an interesting possibility. I'd love to see a Nemesis or Oblivion in the US.

Although knowing Merlin as a Brit, it's a chain that focuses very much on overselling fast tracks, oversubscription of disability passes, constant downtime, reliability/maintenance issues, cheap IP based areas and a constant focus on removing water and flat rides.

I'm not sure there is a American park chain that Merlin can be compared to although I've heard Six Flags goes close apparently. I'm sure the American theme park fans can compare Merlin and the US chains better than I can.

 

[bratcurry]

I'm not sure there is a American park chain that Merlin can be compared to although I've heard Six Flags goes close apparently. I'm sure the American theme park fans can compare Merlin and the US chains better than I can.

Six Flags and Merlin are only comparable in their lackluster operations but that's about it. I'd say Merlin is way worse than Six Flags all in all, so I don't even want Frontier City (which is the by far worst Six Flags Park in terms of the ride portfolio it offers) switching ownership to Merlin.

 

[Pokemaniac]

For actual amusement parks, this is the kicker - the Six Flags/Cedar Fair merger essentially killed regional market competition (which previous was the two firms competing). Unless there's interest from Herschend, Parques Reunidos, or evermore obscure operators, it's hard to really figure out who would be buying.

Hard to figure out why they are selling, as well. Now that they've more or less obtained a monopoly, would it really be a good idea to put some of their parks back on the market for a competitor to buy? Wouldn't it make more sense to just close the parks and enjoy full ownership of the market?

 

[owenstreet7]

Hard to figure out why they are selling, as well. Now that they've more or less obtained a monopoly, would it really be a good idea to put some of their parks back on the market for a competitor to buy? Wouldn't it make more sense to just close the parks and enjoy full ownership of the market?

In my personal opinion, a monopoly in theme parks isn't a good thing as from experience in the UK and Merlin, there's a lot of issues associated with a single theme park operator running the country's major theme parks with no major competitor on a similar scale.

I am baffled why Six Flags would want to sell the lower performing theme parks as I'd thought they'd keep those and invest minimally in the parks.

I hope buyers are found for those parks as competition is needed (even if it's from Merlin).

 

[Sticky_T_Wicky]

The company's earnings release mentions the term leverage 11 times and often it's in conjunction with reducing its leverage. Its goal is to get its leverage ratio to 3.5x by the end of 2027. I have not done a trailing 12-month analysis but annualizing its adjusted EBITDA from its Q3 YTD results leads to a leverage ratio of 5.3x.

There are two ways to adjust an operating leverage ratio, increase adjusted EBITDA (essentially normalized cash flow) or decrease debt. Increasing adjusted EBITDA is difficult and gains will often only be made by percentage points or even fractions of percentage points year over year. Selling less profitable properties and using those sales proceeds to reduce debt is one way to get to that 3.5x ratio sooner.