It’s been a week and a half since the news broke that Orlando-based SeaWorld Parks & Entertainment had made an unsolicited offer to purchase Ohio’s Cedar Fair for $3.4 billion. In that time, not a lot has happened, but now we might have some details as to why that’s the case. It’s now being reported that private equity firm Centerbridge has built up a 5% stake in Cedar Fair since the initial report.
According to Bloomberg, Centerbridge has been building its stake in the amusement park company on the belief that if Cedar Fair truly goes up for sale, there might be more than one company interested in buying it. This could lead to a bidding war, driving up the sale price for Cedar Fair, leading to an even bigger payout to those that own a stake in the company.
At this point it seems likely that Cedar Fair getting sold is a strong possibility. If there was no interest at all in selling then rejecting SeaWorld’s offer would be simple enough, but that has not happened. It’s likely that in the last 10 days there have been conversations, and likely some amount of negotiations.
But with a private equity firm jumping into the mix it potentially changes the math. Centerbridge is apparently a bigger player now then they were at the beginning of this, and they’ll have a certain amount of power in dictating the direction of where things go from here. Depending on what the majority opinion on the sale is, a 5% share could be enough to push things in one direction or another. Though they’ll certainly want a return on the investment, which likely means wanting to make sure the sale results in enough profit after the extra investment.
Back when Disney wanted to buy Fox, Comcast got involved and made its own offer for the studio. Shareholders, of course, wanted to get the best deal they could, and so they played the two sides against each other in order to get a higher offer. It’s conceivable that we could see that happen here. It’s been suggested that another amusement park company, like Six Flags, might be interested in buying Cedar Fair, though there hasn’t been much evidence publicly that they’re interested.
If either SeaWorld or Six Flags were to buy Cedar Fair, whoever did would become the largest amusement park company in the nation. SeaWorld is much smaller in terms of the number of locations it has across the country, there are only six currently, though a seventh, a San Diego based Sesame Place, is set to open next month. But SeaWorld has some of the best total attendance numbers. Six Flags already has 15 locations in North America, without counting water parks. Cedar Fair has 11 amusement parks before adding in the water parks.
While any deal made will certainly take years to complete, any large merger of amusement parks is going to change the entire industry, likely in many ways that can’t be predicted. This saga is far from over yet.
