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Six Flags Over...Knott’s Berry Farm?
Merger would create regional park giga-company
Sorry to invade your inbox again this week, but a bombshell of a theme park story broke yesterday, and I’d be remiss if I didn’t report about it. Because I am sending three newsletters this week, I will not be publishing an article next Tuesday, as I typically do.
Yesterday, Six Flags and Cedar Fair announced a “merger of equals” agreement to combine the two companies into a regional park leviathan or Goliath (choose the metaphor that best suits your brand allegiance).
The deal would yield a company worth upwards of $8 billion and a total portfolio of 27 theme parks located mostly in the U.S. along with a presence in Canada and Mexico. (Here is a map of the combined parks.) That would make it the biggest theme park operator, in terms of number of properties, in North America by far. It would also make the company one of the largest in the world–if not the largest.
The announcement seemingly came out of the blue. A merger had been floated in the past, but it seemed more like posturing than a serious deal. Now that it’s actually moving forward, what might a combined company look like?
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The new entity would be named Six Flags. That’s not surprising, since most people know the brand, which is conspicuously featured at all of its parks. Other than those in the industry and diehard fans (like you?), most folks are not familiar with the Cedar Fair name (which is a combination of two of its parks, Cedar Point and Valleyfair). Save the Peanuts characters that populate its kids areas, there really isn’t much that connects the Cedar Fair parks to one another. For the most part, they forge their own paths. It’s unclear whether the new company would slap “Six Flags” onto all of the current Cedar Fair parks. (Six Flags Worlds of Fun anyone?)
According to the announcement, Richard Zimmerman, president and CEO of Cedar Fair, would assume the same role at the merged company. Six Flags CEO Selim Bassoul would be the executive chairman of the resulting company’s board of directors. That would seem to imply that Cedar Fair’s corporate culture and management principles would guide the new Six Flags. That’s probably a good thing as Cedar Fair has had a steadier hand managing its parks, and both casual and ardent fans generally giver it higher marks for operations. In fact, Six Flags’ brand recognition with Cedar Fair’s leadership–the best of both companies–could be a winning combination for the parks as well as guests. Especially if the new company works hard to burnish the Six Flags brand.
Speaking of the Peanuts characters, it may not be long before Charlie Brown gets kicked to the midway curb. I’d imagine Six Flags’ more popular Bugs Bunny, Daffy Duck, and the other Looney Tunes toons would eventually wind up at the former Cedar Fair parks. Ditto for the DC superheroes.
Despite the many parks that both companies operate, there is relatively little overlap in markets, or what the merger announcement refers to in investor gobbledygook as a “complementary geographic footprint.” It’s unlikely, therefore, that any duplicative parks would close. The only place where it could be an issue is Southern California, home to both Knott’s Berry Farm and Six Flags Magic Mountain. Those parks are far enough away from each other (about 60 miles, but good luck navigating the choked freeways between them) that it shouldn’t matter much. Plus the flagship parks each have a strong identity and devoted customer base. My guess is that management wouldn’t tinker too much with either one.
The deal also includes 15 water parks, including some standalone properties such as Hurricane Harbor in Phoenix. Nine resort properties, including Six Flags Great Escape Lodge in New York and the Resorts at Schlitterbahn in Texas, would be under the expanded corporate umbrella as well. By the way, Six Flags Qiddiya, which is set to open next year in Saudi Arabia, likely won’t be affected by the merger. That’s because Six Flags doesn’t own the park; rather, its Saudi-based owners have a licensing deal with Six Flags. The deal is an example of the value of the Six Flags brand.
This certainly wouldn’t be the first time that parks have changed hands or companies have joined forces, albeit not at this eye-popping level. In 2006, Cedar Fair acquired the Paramount Parks, including Canada’s Wonderland near Toronto and Kings Dominion in Virginia, from CBS Corp. Interestingly, the Marriott Corporation operated two parks, one of which, California’s Great America, ended up in the Cedar Fair chain while the other became Six Flags Great America in Illinois.
Will the merger actually happen? It’s not a done deal, only an agreement between the two companies to combine. Pending shareholder and regulatory approvals, the merger could close in the first half of 2024. The deal may run afoul of antitrust laws. Such an enormous company, with so many regional parks under its belt, could lead to predatory business practices or at least the appearance of unfair competition.
Whew! What do you make of this merger? Do you think it’s wise to go with the Six Flags brand? What would you like to see happen in a combined company?