Though Universal and Disney unquestionably own the theme park world, when it comes to regional, amusement parks, both Six Flags and Cedar Fair dominate the industry, with a combined 37 parks attracting millions of guests every year across North America. And according to a new report, it looks like these two giants may be looking to combine forces to become the largest (and most-attended) amusement park monolith in the world.
According to a report released by Reuters, Six Flags, already the world’s largest regional theme park operator, has approached Cedar Fair about a possible merger. According to the report, Six Flags is offering Cedar Fair a cash and stock offer to take ownership of Cedar Fair’s 11 amusement parks (plus water parks) in an effort to expand its footprint so it can increase ticketing pricing power.
Image: Cedar Fair
Understandably, investors reacted strongly to this news, with stock prices for Cedar Fair jumping as much 11.4% after the news broke and Six Flags shares falling as much as 5.3%. However, though there was initially a lot of excitement around this potential merger, we’re not so sure this giant combination will actually happen, as there are a lot of factors to consider:
Six Flags is currently going through an executive shakeup
Image: Six Flags
Though this report came out earlier this week, late 2019 would ostensibly not be a good time for Six Flags to make a big move, as Chief Executive James Reid-Anderson is preparing to retire by the end of February 2020, and unfortunately the amusement park giant has not yet found a replacement for their outgoing chief executive. Making such a big move without knowing who will be in the company’s biggest leadership position in just four months would seem to be ill-advised, especially since whoever is being looked at to replace their current CEO would need a pretty detailed plan to manage this giant acquisition.
The value in covering the map
Image: Six Flags
Right now, the biggest benefit Six Flags could get from acquiring Cedar Fair would be the ability to get a near-stranglehold on the regional parks market in the US, as more than half of all amusement parks in North America belong to either Six Flags or Cedar Fair. However, even though this might sound like a good idea, it would require a lot of work (not to mention investment) to create a singular management umbrella for all of these different parks, which is something that Six Flags may not actually be able to do at the moment. Even banking giant Wells Fargo released a statement saying they weren’t sure a merger between Cedar Fair and Six Flags could even happen in 2019, adding that “the two theme park cultures are much different and a substantial premium would be required to acquire [Cedar Fair] to cover tax considerations for shareholders”
Image: Six Flags
Though the stock market definitely had a big reaction to the news of this potential seismic change in the theme park world, we’re just not convinced that a merger between Six Flags and Cedar Point is a real possibility right now. Of course, it could be indicative to a long-term plan for Six Flags, and we may see more talk of acquisitions in the future, but for right now, we’d expect things to stay about the same with these two theme park giants.
