The multi-year merger and acquisition (M&A) activity between Six Flags (NYSE:SIX) Entertainment Corp (NYSE:SIX) and Cedar Fair LP (NYSE:NYSE:FUN) has culminated in a union that analysts predict could revolutionize the U.S. amusement park industry. The newly formed entity, retaining the name Six Flags, trades under the FUN symbol, controlling 27 amusement parks, 15 water parks, and nine resorts across North America.
Investors reacted positively to the merger news today, with shares of Six Flags climbing by 6%. However, Cedar Fair's shares dipped by 0.36%, while SeaWorld (NYSE:SEAS) Entertainment, which remains without a merger partner, saw its shares rise by 5.2%.
Analysts anticipate several benefits from this merger, including an enlarged geographic footprint and augmented operating resources. Analysts from Jefferies sees opportunities for sale leaseback of assets and growth through lease financing. Jefferies also anticipates a substantial increase in the implied value for Six Flags shareholders post-merger.
Macquarie's analysts suggest that the combined entity could present a compelling national pass network, particularly in shared locales, and even against destination parks outside its network. Truist projects a 30% to 80% upside potential for the merged company considering pro-forma profit & loss statements, current capital structures, and historical valuation ranges.
The merger comes at a time when both companies are bouncing back from a season affected by heat. Six Flags has been implementing a rejuvenation strategy involving pricing adjustments and park investments under CEO Selim Bassoul. Cedar Fair is set to disclose earnings soon under CEO Richard Zimmerman's leadership. The union is expected to bolster Six Flags' Midwest presence.
Investor Jonathan Litt has been advocating for Six Flags to monetize its real estate amid these changes. This backdrop includes an industry attendance slump, SeaWorld's rejected purchase proposal for Cedar Fair, and Disney slashing children's ticket prices. Despite these challenges, Six Flags' shares closed higher today by 5.53%.
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