Six Flags Merger Harmful To Cedar Fair Shareholders, Claims Investor

in Six Flags, Theme Parks

A full car on Ghost Rider at Knott's Berry Farm

Credit: Knott's Berry Farm

According to Neuberger Berman, the landmark Six Flags merger is doing much more harm than good for shareholders invested in Cedar Fair Entertainment.

Guests riding Twisted Colossus at Six Flags Magic Mountain
Credit: Six Flags

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If you follow theme park news at all, the biggest story of the year was easily the Six Flags-Cedar Fair Merger, taking two of the largest companies in the amusement park business and uniting them under a single title. Higher-ups at both companies claim that this is absolutely necessary given the stranglehold competitors like Disney and Universal have on the business.

This massive news has shaken the amusement industry to its core, putting iconic theme parks like Knott’s Berry Farm, Cedar Point, Kings Island, Six Flags Great Adventure, Carowinds, Six Flags Fiesta Texas, Great America, Dorney Park, and every Soak City Water Park in one combined company.

Guests riding the Jaguar roller coaster at Knott's Berry Farm
Credit: Knott’s Berry Farm

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Needless to say, thrill ride and roller coaster enthusiasts have been confused but excited about the possibilities. Does this mean they can now use the same pass in every park in North America? Will Knott’s Scary Farm become Fright Fest? What will happen to [insert local park here]?

Apparently, park guests weren’t the only ones with questions; shareholders were equally confused. And according to recent reports, some are not too happy with the merger.

Investor Claims Cedar Fair Took Six Flags Merger Out of Shareholders’ Hands

Guests riding the Jersey Devil at Six Flags Great Adventure
Credit: Six Flags

The Six Flags-Cedar Fair merger seemed to have caught everyone by surprise. This included Cedar Fair shareholders, some of whom claimed they were never consulted or asked to vote on the deal.

According to a report from Reuters, Neuberger Berman, a private employee-owned investment firm that owns approximately 3% of Cedar Fair Entertainment, the deal was structured explicitly so that Cedar Fair shareholders couldn’t vote on the deal the same way that Six Flags shareholders could. This was achieved by Six Flags Entertainment Corporation paying out an $85 million dividend that made the company smaller than Cedar Fair, meaning that they were the acquirer and not the acquired.

El Toro with Kingda Ka in the background at Six Flags Great Adventure
Credit: Pablo Costa Tirado via Wikimedia Commons

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A breakup fee was also enforced, meaning Cedar Fair couldn’t explore other offers. On top of this, this merger will dash tax benefits for Cedar Fair shareholders since the combined entity will now be taxed as a corporation and not a partnership. According to the director of Neuberger Berman, Doug Rachlin, Cedar Fair held a phone call with him after he sent a letter, but no further correspondence has been initiated.

A large reason for the Cedar Fair shareholders essentially being muscled out is that they once successfully blocked a similar deal in 2010 when the private equity firm Apollo Management tried to execute a similar deal. Only time will tell how this deal will turn out for every park now under the Six Flags banner.

Do you think that the Cedar Fair-Six Flags merger is a good idea? Let Inside the Magic know in the comments down below!

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