Thursday, December 17, 2009

Cedar Fair to be Acquired by Apollo Global Management

In a major announcement today, Cedar Fair has released that they've agreed to be purchased by Apollo Global Management. The $2.4 billion agreement will see Apollo assume all of Cedar Fair's debt, which leaves about $635 million as the premium price of the company. Apollo is a very large investment company, generally similar to Blackstone which just purchased the Busch Entertainment parks.

Cedar Fair's board has already approved the sale, though it is contingent on obtaining a 2/3 vote of the company's unit holders. If all goes as planned, the sale could close at the start of the 2nd quarter 2010, leaving Cedar Fair as a private company wholly owned by an affiliate of Apollo Global.

What does this mean for the parks? Too early to say. Apollo does have investments in entertainment companies such as Harrah's and AMC Movie Theaters, though this would be their first with amusement parks.

There are many variables that still need to play out for me to feel comfortable having a strong opinion on this. As of now, Cedar Fair certainly was struggling under it's current management in many areas, but strong as ever in others. The Paramount purchase mess really did create a debt load that was too much to sustain in these times, so something had to give.

If the sale goes though it will be some time before we see how much of Cedar Fair's current corporate mentality soldiers on, and that's the most important factor to me. Really, it could be fantastic news... or awful - as much as I hate to say it only time will tell on that one.