Amusement Park company Cedar Fair (NYSE: FUN) slid in trading on Thursday after announcing a merger with Six Flags Entertainment Corp. (NYSE: SIX). The combined company will have a pro forma enterprise value of around $8 billion based on both companies’ debt and equity values as of October 31.
According to the terms of the agreement, Cedar Fair unitholders will receive one share of common stock for each unit owned, while Six Flags shareholders will receive 0.58 of shares of common stock in the new combined company for each share owned. Following the close of the merger, Cedar Fair unitholders will own around 51.2% of the combined company while Six Flags shareholders will own the remaining 48.8%.
The combined company will have a portfolio of 27 amusement parks, 15 water parks and 9 resort properties. The parks are located in the U.S., Canada and Mexico. The merger, which should close in the first half of 2024, is expected to create annual synergies of $200 million and is anticipated to be accretive to earnings per share for the shareholders of both companies within the first year of the close of the transaction.
Following the merger, the combined company is projected to “generate pro forma $3.4 billion in revenue, $1.2 billion in Adjusted EBITDA, and $826 million of free cash flow, reflecting run rate cost savings of $120 million and revenue uplift resulting in $80 million of incremental EBITDA.”
Cedar Fair also announced its fiscal Q3 results with adjusted EBITDA of $388 million, up by 7% year-over-year, while its revenues declined by $1 million year-over-year to $842 million. Analysts were expecting Q3 revenues of $824.2 million.
In addition, Cedar Fair announced the declaration of a cash distribution of $0.30 per limited partner (LP) unit payable on December 20, to unitholders of record as of December 6.
For the five-week period ended October 29, the company announced preliminary net revenues totaling $226 million, a decline of less than 1% from the comparable five-week period last year. Attendance for the five-week period totaled 3.3 million guests, up by 2% year-over-year.
Is FUN a Good Stock to Buy?
Analysts remain bullish on FUN stock with a Strong Buy consensus rating based on seven Buys and one Hold. Year-to-date, FUN stock has slid by more than 12%.
