Six Flags-Cedar Fair merger is a deal of the 'century': Analyst

Six Flags (SIX) and Cedar Fair (FUN) are set to finalize their merger on Monday, creating an entity valued at around $8 billion. Citi leisure and travel analyst James Hardiman joins Wealth! to give insight into the merger and what investors can expect from the new stock, which is expected to go public on July 2.

"This is far and away the biggest deal, really the only deal of its kind this century, and I think it creates significant value," Hardiman tells Yahoo Finance. He characterizes the Cedar Fair management team as the "steady hand" that Six Flags assets have been missing.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

The dawn of a new era for theme parks.

Six Flags and Cedar Fair expected to close their merger today in the combination of the two regional theme parks would create a combined entity valued at $8 billion shares expected to begin trading on the New York Stock Exchange as early as tomorrow.

July 2nd.

And our next game sees meaningful upside, potential for investors.

For more on this.

I'm joined by James Hardman City like uh leisure and travel analyst, James, great to speak with you and grab some time as always here.

I mean, just the significance of this combination and what success looks like, post combination uh and deal for both of these companies now.

Yeah, I mean, it's a big deal.

You don't see a whole lot of M and A in this space.

I've been covering it for 15 years.

This is, this is far and away, the biggest deal really the only deal of its kind uh this, this century.

Um And I think it creates significant value.

You talked about, you know, what success looks like.

Um You know, we, we think that value is created here.

A because um there's a significant management upgrade, right.

The Cedar Fair management team is the steady hand that I think these six Flags assets have needed for so long.

Um and have, has, has been missing.

Uh Ultimately, they've been doing this for a very long time.

I think there's a liquidity upgrade.

Um in addition to sort of bringing together two small cap companies to make them a AAA mid cap company.

Uh Cedar Fair has historically been an M LP, which just a lot of investors just ultimately don't want to bother with.

It's now gonna convert to a traditional C Corp which I think helps and there's significant synergy opportunities here as well.

What does this mean for the consumer?

I mean, a lot of households trying to figure out what theme park experiences are, are affordable for them right now as they're kind of picking and choosing where they can play in the experience economy.

What does this mean for affordability once the consummation fully takes place here of this deal?

Yeah, I mean, I think there's gonna be in, in a handful of markets, there's gonna be an opportunity to bring together multiple parks uh in a season pass uh structure, right?

So I, I think maybe most notably of that Southern California market, if you live in Los Angeles and you know, you would consider going to either uh six Flags Magic Mountain or Knotsberry Farm, which is a Cedar Fair Park.

Um One of them is north of L A, one of them is south of LA.

I think there's an opportunity there to get a season pass where you could get unlimited visits to both for a price that is, is probably gonna be less than a single day visit to, to Disneyland.

Um, I think that's a big opportunity now.

It's not, you know, in most cases there isn't a ton of overlap.

Um, and so the consumers aren't gonna see much of a difference, but I think there are a handful of cases in which they will.

James II, I imagine that, you know, in your line of work, which, which sounds very fun as you're kind of looking across these theme parks, you know, maybe you get to go to one from time to time in different markets and really perhaps put the experiences up against one another.

What, what is the biggest value driver that consumers are really looking for from theme parks, especially in this economy?

Yeah, I mean, I think theme parks are, you know, first and foremost, they're an experiential uh product, right?

And, and what we've seen for at least the better part of the last decade is that experiences are winning out over, over consumer goods, right?

Um, I think in addition to that it's a, it's a family friendly form of entertainment, uh, it's safe, which was certainly, you know, a big, big uh draw coming out of the pandemic.

But ultimately, it's a, it's a way to take your family to have some fun to, to unplug so to speak.

Um These are assets that aren't ever going to be, you know, at risk from the Amazons and the Googles of the world.

Right?

It's getting outside is having fun with, with friends and family.

James.

I've been bullish on dipping dots since 06.

So hopefully that's holding up right now, James Harder man, who is the city leisure and travel analyst, James?

Thanks so much for taking the time.

Thank you.