Credit: Edited by Inside The MagicThe United States Justice Department is intervening in a massive theme park merger that might not see the light of day.
Cedar Fair and Six Flags Merger Halted by U.S. Justice Department
According to Cleveland.com, the United States Justice Department has launched an antitrust review of the current potential Cedar Fair and Six Flags merger announced in November 2023.
In its regulatory filings on Tuesday, Cedar Fair disclosed that the Department of Justice (DOJ) had requested a substantial number of documents about the proposed “merger of equals,” announced in November.
The scrutiny by the DOJ was anticipated, and Cedar Fair expressed confidence that the merger would proceed as planned, expecting completion in the first half of 2024. If approved, the resulting entity named Six Flags would rank among the world’s largest amusement park operators. It would have a significant presence with 27 amusement parks, 15 water parks, and nine resorts across 17 states, Canada, and Mexico.
Notable parks affected by this potential merger include Cedar Point and Kings Island in Ohio, both owned by Cedar Fair. Industry consultant Dennis Speigel considers the DOJ’s interest in the deal a standard procedure, stating that it is unsurprising. He believes the government is unlikely to find grounds to halt the merger, emphasizing that the new company would only represent a fraction of the total amusement parks in North America.
However, antitrust expert Anat Alon-Beck holds a more cautious view, pointing out the current skepticism in Washington regarding mergers. She asserts that the DOJ’s investigation is expected, and potential areas of interest may include details on cost savings, pricing strategies, recent property acquisitions, litigation, and other relevant factors.
Alon-Beck draws attention to ongoing concerns about other mergers in the grocery industry, such as Kroger and Albertsons, and the recent opposition to the JetBlue and Spirit Airlines merger. She suggests that the DOJ might scrutinize the Cedar Fair-Six Flags merger for potential market overlap, possibly leading to the requirement to divest properties in specific markets.
While Cedar Fair CEO Richard Zimmerman expressed confidence in the proposed merger’s ability to withstand regulatory scrutiny, acknowledging the process to be followed, he highlighted the broader scope of the leisure market. Zimmerman emphasized the diversity within the industry, encompassing not only amusement parks but also bowling alleys, movie theaters, and athletic events, minimizing perceived overlap.
Cedar Fair Six Flags would be a combined company that will bring about new experiences and attractions for its theme parks nationwide. Those theme parks include Six Flags Great America, Cedar Point, Dorney Park, Wildwater Kingdom, Kings Dominion, Six Flags Great Adventure, Cedar Point Shores (the former Soak City), Six Flags Magic Mountain, and many other resort properties around the country. This proposed transaction between these theme park giants would bring competition between SeaWorld Entertainment, Universal Parks, and Disney World parks.