(Reuters) - U.S. amusement park operator Cedar Fair LP (FUN.N) has rejected a $4 billion cash-and-stock offer from larger peer Six Flags Entertainment Corp (SIX.N) as inadequate, people familiar with the matter said on Friday.
Cedar Fair’s decision is a blow to Six Flags, which is already the world’s largest regional theme park operator and has been looking to expand its footprint so it can increase its ticketing pricing power.
Six Flags had offered to acquire Cedar Fair for around $70 per share, to be paid for the most part by using Six Flags shares as currency, but also funded with a small cash component, the sources said. Cedar Fair shares were trading at around $58 right before Reuters broke news of Six Flags’ bid on Wednesday.
Cedar Fair responded that Six Flags’ bid was too low, not least because it did not compensate Cedar Fair shareholders for giving up on the company’s tax-advantageous publicly traded partnership. This allows the company to pay out the majority of its earnings to shareholders without first paying U.S. federal or state income taxes.
Six Flags Chief Executive James Reid-Anderson is preparing to retire by the end of February, and the company had offered Cedar Fair executives roles in the management of the combined company, though this was not enough to persuade them, the sources added.
Reactions from stock market investors, as well as amusement park fans concerned about the impact of the potential deal on how Cedar Fair parks will be run, have been negative, and there is no indication that Six Flags will counter with a new offer, the sources said.
The sources asked not to be identified because the matter is confidential. Cedar Fair and Six Flags did not immediately respond to requests for comment.
Based in Grand Prairie, Texas, Six Flags has 26 parks across the United States, Mexico and Canada. Headquartered in Sandusky, Ohio, Cedar Fair owns and operates 11 amusement parks, four outdoor water parks and an indoor water park in several U.S. states and in Toronto, Ontario.
Dealmaking in the leisure and entertainment sector has been heating up. Earlier this week, private equity firm Blackstone Group Inc (BX.N) said it had agreed to acquire a 65% stake in U.S. resort operator Great Wolf Resorts Inc in a $2.9 billion deal. Great Wolf’s owner, Centerbridge Partners LP, will remain an investor in the company.
Reporting by Greg Roumeliotis in New York