Knott's Berry Farm parent Cedar Fair cancels buyout deal, but stock rises on speculation of other offers
Cedar Fair Entertainment Co., the amusement park owner whose properties include Knott’s Berry Farm in Buena Park, on Tuesday called off its buyout deal with private equity firm Apollo Global Management after major shareholders objected.
But the company’s stock is up on speculation about other possible merger ideas.
The deal with Apollo, announced in December, was opposed by Q Funding, a Texas investment firm that is Cedar Fair’s biggest shareholder, with more than 18% of the stock. Q Funding said Apollo’s offer was too low.
Cedar Fair’s second-biggest holder, money manager Neuberger & Berman, also said it wouldn’t support the takeover.
“The board has heard from Cedar Fair unitholders and it is apparent that the merger transaction does not have the required level of investor support,” Dick Kinzel, chief executive of Ohio-based Cedar Fair, said in a statement. He said the company would take time to consider its "next steps."
Cedar Fair owns 11 amusement parks including Knott’s, seven water parks and five hotels in the U.S. and Canada.
New York-based Apollo, led by Leon Black, had agreed to pay $11.50 a share for Cedar Fair. The deal was valued at $2.4 billion, including assumption of the company’s heavy debt -- a burden that had helped to drive Cedar Fair’s shares down sharply since 2006, to as low as $6.10 in November.
Since the Apollo deal was announced, Cedar Fair’s shares have traded above $11.50 for much of this year on speculation that a better offer might surface or that Apollo would raise its bid.
Early Tuesday the stock plunged to $11.21, from $12.20 on Monday, after the announcement that the deal had been scuttled. But the shares quickly rebounded, and were trading at $12.44 at about 11:30 a.m. PDT.
Q Funding said in a filing Tuesday with the Securities and Exchange Commission that it had been contacted by certain bondholders of Six Flags Inc., the amusement park chain that filed for Chapter 11 bankruptcy protection last June.
Q Funding said the bondholders wanted to talk about “the hypothetical possibility of merging or combining [Cedar Fair] with Six Flags Inc.”
But Q Funding said it did not “currently intend to engage in conversations about the possibility of a combination or merger between Six Flags Inc. and [Cedar Fair].”Six Flags is trying to work out a reorganization plan with its creditors.
-- Tom Petruno
Photo: The Pony Express ride at Knott's. Credit: Knott's Berry Farm