Six Flags and Cedar Fair have merged
The deal creates a theme park behemoth, which is seeking to improve its core economics as it manages more than $4 billion in net debt
Rollercoaster tycoon
This week, the merger of theme park operators Six Flags and Cedar Fair was completed, creating a new giant in the industry, with annual revenues north of $3 billion, that spans 27 amusement parks and 15 water parks. Calling itself the “Six Flags Entertainment Corporation”, the combined entity, which is trading under Cedar Fair's ticker, FUN, will likely see close to 50 million people roll through its regional parks this year (last year would have seen 48 million).
Even at its combined scale, FUN won’t threaten the dominance of Disney or Universal, which continue to dominate the top spots for attendance. But, by joining forces, the company will be looking for that which consultants and investment bankers often promise in such deals: the rewards of greater scale.
In this case that’s important because the new company is set to be saddled with more than $4 billion of net debt. So, despite all the corporate jargon of offering “a more engaging and immersive guest experience”, a primary focus of the merger will be managing that debt load… which means getting more out of each guest.
In 2023, Six Flags (the standalone company) filings revealed that an average guest was worth about ~$61 in revenue to the park, ~$33 from admission and another ~$28 for theme park necessities like nachos, dirty fries, funnel cakes, merchandise, and extras like fast-passes. Six Flags also generated an extra ~$3 per guest through sponsorships and international agreements, helping take its operating profit margins to about 20%, or ~$13 in our example.
After the merger, however, the company believes it can make more. Indeed, an investor presentation reveals that FUN is hoping to realize significant synergies — every consultant's favorite word — from the deal. Some $120M a year is expected to be saved in costs, and an additional $80M of incremental profits (EBITDA) due to an “improved guest experience” are expected to be realized within 3 years of the deal’s close.
