Six Flags, rival theme park brand Cedar Fair to merge in bid to spark post-pandemic recovery

Cedar Fair and Six Flags Entertainment on Thursday agreed to merge to spur a post-pandemic recovery that smaller US amusement park operators have been chasing as leisure spending remains low amid an uncertain economic outlook.

The park brands have been struggling as recent investments to bolster attendance and customer spending have not yielded desired results, with return to pre-pandemic profitability remaining elusive.

The deal will help with “a strong revenue and cash flow generation profile” amid competition from rivals like SeaWorld Entertainment and Disney’s theme parks, Cedar Fair and Six Flags said in a statement.

It will also “mitigate the impact of seasonality and reduce earnings volatility through a more balanced presence in year-round operating climates,” they said.

Macquarie analyst Paul Golding said the deal would be “beneficial to shore up … regional access and pricing arena, potentially leaving only SEAS and the more expensive destination parks outside of a new network.”

Shares of Six Flags were up more than 4.3%, while Cedar Fair was down 2.2%.

Under the terms of the deal, each Six Flags share will be worth 0.58 shares of the combined company, which values Six Flags at about $2 billion.

That is higher than the company’s equity value of $1.75 billion as of Wednesday’s close, while Cedar Fair’s valuation stood at about $1.92 billion.

The stocks had jumped roughly 6% on Wednesday following a Reuters report that the duo was exploring a potential merger. They have each lost about 10% of their value this year.

The combined company will operate 27 amusement parks, 15 water parks and 9 resort properties across 17 states in the United States, Canada and Mexico.

The merger is expected to close in the first half of 2024, following which Cedar Fair shareholders will own about 51.2% of the combined company and Six Flags shareholders the rest.