Originally Posted By brotherdave It was announced today that Apollo Management LP is looking to purchase Cedar Fair for approximately $700 million and would be responsible for the $1.6 billion of debt incurred in the company. All parks in the chain would be part of the deal including Cedar Fair's flagship park, Cedar Point and Knott's Berry Farm <a href="http://www.sanduskyregister.com/articles/2009/12/16/breaking_news/doc4b295d3e5707c911502985.txt" target="_blank">http://www.sanduskyregister.co...2985.txt</a>
Originally Posted By Darkbeer It's official.... <a href="http://latimesblogs.latimes.com/money_co/2009/12/cedar-fair-buyout-takeover-apollo-knotts-berry-farm.html" target="_blank">http://latimesblogs.latimes.co...arm.html</a> >>Cedar Fair, which owns Knott’s Berry Farm in Buena Park and other amusement parks nationwide, agreed late Wednesday to a $2.4-billion buyout by private equity firm Apollo Global Management. The deal follows a poor summer for Cedar Fair as the lousy economy clipped park attendance. The Sandusky, Ohio, company’s shares plunged as low as $6.10 in November, from $11.15 in mid-September, after the firm on Nov. 3 said nine-month revenue slumped nearly 8% from a year earlier, to $810 million. Cedar Fair also warned in the Nov. 3 report that attendance trends remained negative in October. Besides Knott’s Berry Farm, Cedar Fair’s 11 parks include Cedar Point in Ohio, Kings Dominion in Virginia and the Great America park in Santa Clara, Calif. It also owns seven water parks and five hotels. New York-based Apollo, led by Leon Black, said it would pay $11.50 a share for Cedar Fair, a 27% premium to the stock’s closing price of $9.08 on Wednesday<<
Originally Posted By wahooskipper Well, it won't be a done deal for a couple of months. Cedar Fair has 40 days to entertain other bids and 2/3 of the shareholders have to give approval. But, I don't see a lot of other buyers in the market and since Cedar Fair stopped its quarterly distribution I suspect most shareholders will be itching for some sign of life and will green light this.
Originally Posted By Jim in Merced CA Apollo Global Management -- yikes. Seems like the kind of organization that may want to liquidate a theme park company. Dunno...
Originally Posted By wahooskipper Well, Cedar Fair alone has expressed an interest in "thinning the heard" and selling off some of its less profitable parks. (I believe Worlds of Fun and ValleyFair were two parks previously mentioned.) But, they could not have timed the purchase of the Paramount Parks any worse. Taking on that massive debt and then facing the recession was just too much adversity. The CEO (Kinzel) deserves some of the blame but a lot of smart people did not predict what we are dealing with right now. The only way Cedar Fair survives at all is with big money behind it and that is what Apollo offers. I fully expect a sell off but I also expect they will keep the core parks (Cedar Point, Knott's, King's Island and King's Dominion and the park up in Canada.) And, I think we will see a change in leadership...which is probably overdue.
Originally Posted By Sport Goofy I would expect a sell-off, if not for the abysmal state of the commercial real estate market right now. Even if they just sold off the parks for the land value, they could not have picked a worse time to be doing that. The U.S. theme park industry is pretty interesting right now. Six Flags in bankruptcy, Cedar Fair sold off with massive debt, Universal sold to Comcast with a huge debt payment hanging over its head this spring. I'm a little bit amazed that Disney hasn't fared worse during the recession.
Originally Posted By wahooskipper Well, Disney did something the Regional parks didn't do (to any degree). Disney discounted the HECK out of the place. That certainly helped them hold their own the last year and a half. (Though recent news suggests the discounting is coming to a halt after the first of the year.) And, I think people who visit amusement parks consider "value" for those visits more than they do any other "entertainment" expense. When you go to a movie you go to a movie. When you go to a sporting event you don't give it a lot of thought. But, when planning a vacation I think a lot of folks put pen to paper and try to make the most of their money. I still consider a Disney trip a good value. The multi-day tickets make you feel that value more. The food at Disney is far better (and often cheaper) than you find in the Regional parks. And, Disney is far better at catering to the family that are most of the Regional parks. (Disclaimer: Holiday World is in a class by itself.) The only thing that surprises me at all (and it doesn't surprise me a lot) is that Dick Kinzel is still the CEO of Cedar Fair. You can draw a lot of comparisons to his last couple of years at the helm and the last couple of years of Eisner at the helm of Disney.
Originally Posted By Schmitty Good Vibes Yikes! Just do a Google search on the Apollo companies. These guys are into everything(!) and very good at buying and then breaking things down. All I wish is that Knott's could get some of it's old self back, but I think that's just a pipe dream.
Originally Posted By Lady Starlight <<All I wish is that Knott's could get some of it's old self back, but I think that's just a pipe dream.>> SGV, there's always hope.
Originally Posted By crapshoot <a href="http://finance.yahoo.com/news/Cedar-Fair-Takeover-not-apf-1701123614.html?x=0" target="_blank">http://finance.yahoo.com/news/...html?x=0</a> "SANDUSKY, Ohio (AP) -- Cedar Fair LP, one of the nation's largest operators of amusement parks, said Tuesday that its plan to go private in a $635 million takeover by asset manager Apollo Global Management has been scrapped because of a poor response from shareholders."
Originally Posted By Jim in Merced CA I always enjoy these kinds of sentences -- buried toward the end of the story. <With their deal now terminated, Cedar Fair said it would reimburse Apollo $6.5 million for expenses related to the proposed transaction.> $6.5 million builds a nice theme park attraction -- or five.
Originally Posted By Manfried If I were Cedar Fair shareholders, I would demand the existing management resign.
Originally Posted By brotherdave Yes. The current CEO announced his retirement 5 years ago, but decided to stay on after the Paramount Park buyout. I think it may be time for new management to run the company.
Originally Posted By Sport Goofy << If I were Cedar Fair shareholders, I would demand the existing management resign. >> While that all sounds fair, the shareholders should have demanded that the management not complete their buyout of Paramount Parks and the associated debt build-up that caused this mess. The same shareholders approved that merger.
Originally Posted By wahooskipper The purchase of the parks certainly looks bad in hindsight when viewed with what happened to the economy. But, I don't think the management failure was the purchase. The failure was in them chasing away too many experienced Paramount executives for one...and trying to make the Paramount Parks fit into the mold of Cedar Point. For THAT Kinzel should be held accountable.
Originally Posted By Sport Goofy << The purchase of the parks certainly looks bad in hindsight when viewed with what happened to the economy. >> The purchase of the parks was bad irrespective of the economy. The credit crunch just exacerbated the problems, but they would have surfaced in time anyway.
Originally Posted By wahooskipper I disagree. Growing Cedar Fair through park acquisitions has always been a part of Cedar Fair strategy. I would argue that they fumbled Geauga Lake but the Paramount Parks by and large are great for their portfolio. King's Dominion, King's Island and Canada's Wonderland (a real windfall) are really right up there with Cedar Point. But, they did drive off a lot of Paramount experience and their one size fits all approach (group sales and season pass policies in particular) really muddied things up. Kinzel admitted as much in last year's annual report. I don't remember hearing anyone criticizing the Paramount purchase. Certainly the institutional investors were very excited (I listed to those calls) early on. The debt load is a problem now because of the credit crunch but would have been manageable had this not transpired.
Originally Posted By Sport Goofy << I disagree. Growing Cedar Fair through park acquisitions has always been a part of Cedar Fair strategy. >> If you pay any attention to cash flow needs of amusement parks, you would realize this is a horrible strategy. In order to keep customers coming through the gates, parks have to use the bulk of their cash flow to modernize and build new things. If they frivolously spend money buying new properties, it takes cash away from upgrading the existing properties. Disney is in a mess with this, too. They are over-extending their cash flow expenditures by building foreign parks while neglecting the existing parks. The only difference is that Disney still has a lot of cash on hand, while Cedar Fair ran out.
