Cedar Fair LP has agreed to be acquired by asset manager Apollo Global Management for about $635 million in cash. The acquisition capped a year in which the struggling economy led to the drop-off of more than a million visitors to the company's amusement and water parks and it saw a rival succumb to bankruptcy protection.
The $11.50-per-share offer marks a 27 percent premium to Cedar Fair's $9.08 closing stock price Wednesday. Including assumed debt, the companies value the deal at $2.4 billion.
"This transaction allows Cedar Fair unitholders to realize significant value from their investment in our company over recent trading levels," said lead director, Michael Kwiatkowski, in a statement. "Apollo has a strong track record of growing businesses, and its desire to add Cedar Fair to its portfolio serves as a testament to our solid business model and the talent of our people."
Sandusky, Ohio-based Cedar Fair owns and operates 11 amusement parks, seven water parks and five hotels. Its properties include Cedar Point in Ohio, Canada's Wonderland near Toronto, Dorney Park in Pennsylvania and California's Knott's Berry Farm and Great America.
For the nine months that ended Sept. 27, Cedar Fair reported a profit of $61.7 million on revenue of $810.5 million, down from $62.5 million in earnings and $877 million in revenue a year earlier, despite having 25 more operating days in 2009. The company said attendance dropped by 1.2 million visitors during the first three quarters, and guests who did visit the parks spent less. Cedar Fair blamed a sharp decline in group sales business due to the poor economy and spending cuts at many businesses and schools, as well as weaker season pass sales and rainy weather.
The company's shares have fallen along with its sales, declining 31 percent in the past 12 months.
Rival theme park operator Six Flags, which owns 20 amusement parks in the U.S. and other countries, sought bankruptcy protection in June, burdened by high debt and declining park attendance by economically strapped consumers.
The deal has been unanimously approved by Cedar's board of directors and is expected to close by the start of the 2010 second quarter. It is contingent upon holders of two-thirds of the company's shares supporting the transaction and regulatory clearance. Under the terms of the merger agreement, Cedar Fair may solicit alternative bids for 40 days.
Affiliates of J.P. Morgan, BofA, Merrill Lynch, Barclays Capital Inc., UBS Investment Bank and KeyBanc Capital Markets have provided a total of $1.95 billion in financing commitments.
Rothschild Inc. and Guggenheim Securities LLC are the company's financial advisers, and Weil, Gotshal & Manges LLP and Squire, Sanders & Dempsey are its legal advisers. Wachtell, Lipton, Rosen & Katz and O'Melveny & Meyers LLP acted as legal advisers and BofA Merrill Lynch, J.P. Morgan, Barclays Capital Inc., and UBS Investment Bank acted as financial advisers to Apollo on the transaction.
In aftermarket trading, Cedar Fair shares soared $2.57, or over 28 percent, to $11.65.