Merger maintains promises to Sandusky

SANDUSKY — When news broke Thursday morning of two amusement park Goliaths — Cedar Fair and Six Flags Entertainment Corp. — merging, opinions varied on the union. Locally, some people saw the development as good. Others not so much. But public officials who view Cedar Point as the city's crown jewel and cash cow shared an optimistic viewpoint of this game-changing transaction. "I see nothing but positives coming out of the merger," Sandusky ex officio mayor Dick Brady said. "Anytime an anchor institution like Cedar Fair makes a move to strengthen itself financially, it benefits Sandusky." Brady referenced the $8 billion deal in which a combined portfolio among two companies now boasts 27 amusement parks, 15 water parks and nine resort properties across 17 states in the U.S., Canada and Mexico. A move does require the company's headquarters move from Sandusky to Charlotte, North Carolina. It's where a satellite corporate office exists and Cedar Fair president and CEO Richard Zimmerman often works from. "Our merger with Six Flags will bring together two of North America's iconic amusement park companies to establish a highly diversified footprint and a more robust operating model to enhance park offerings and performance," Zimmerman said in a statement. Yet it does mandate to keep "significant finance and administrative operations" in Sandusky, according to a press release. "This merger has no effect on that stream of revenue," Brady said. "This is a continuation of a mutually beneficial, 150-year-plus partnership between us and them." Cedar Point's roots in Sandusky trace back to 1870 when it opened as a beach and bathhouse. From there, Cedar Point evolved into a world Cedar Fair's flagship property, hence the parent company's name. Facts over fiction Sandusky officials came out with a statement to squash any speculations containing inaccurate information. Here are some highlights as approved by city manager John Orzech: • "Nothing will change with Cedar Point's presence, name and critically important park for Cedar Fair." • "Charlotte is where this merger will have its headquarters, as they theoretically have had for several years now." • "The Cedar Fair corporate presence of finance and administrative personnel, over 80 employees, will remain in Sandusky as it has. There was a $4 million renovation at the Sports Force complex to accommodate the employees." • "The (Cedar Fair) chief financial officer advised this was mainly a merger of equals, blending two teams with the best talent that both companies have." • Cedar Fair "remains committed to continuing to be a good corporate business in our community and (to executives), nothing will be impacted in Sandusky. The corporate presence that is here will remain here." • Cedar Point and Cedar Fair will continue paying what it owes in taxes. Some people on social media are making a connection between this deal and when Six Flags bought Geauga Lake and shut the famed amusement park down in 2007. It's highly unlikely a similar situation with Cedar Point will pay out. Executives involved the deal stressed how important Cedar Point, the flagship park for Cedar Fair, is for this overall merger. Honoring Sandusky's deal No matter who owns Cedar Point or merged with Cedar Fair, the entity running Sandusky's renowned amusement park must fulfill its existing obligations. This would include making good on a $100 million milestone agreement inked in 2021 with city leadership. Former city manager Eric Wobser, who now leads the Greater Sandusky Partnership, played a big role in those negotiations. Two years ago, Cedar Fair executives and city officials came to terms on a deal that called for improving infrastructure, upgrading public amenities and creating new systems for public transportation. It would be achieved through two separate Cedar Point-based tax increases — admissions, or a fee tacked onto tickets at entertainment-based venues, and a new parking tax — necessary for a deal to occur. Officials approved those taxes, which went into effect in 2022, which largely affect those visiting the amusement park. Cedar Point provides the overwhelmingly vast majority of admissions taxes collected by Sandusky's government. "The city has been assured that the current Cedar Fair administrative and finance operations in Sandusky will remain here after the merger with Six Flags is complete," city manager John Orzech said. "We expect that Cedar Point will remain one of the flagship parks in the new company, and we will continue to ensure that Cedar Point's presence here not only makes Sandusky a great place to visit but also a great place to live." Among the most notable details, through a one-of-a-kind financial arrangement, this alliance calls for about $100 million in investments through: • Constructing a new causeway, doubling as Cedar Point's main entranceway; This concept involves extending the Sandusky Bay Pathway onto the highway. Doing so would allow for pedestrian access on the causeway — through a dedicated, protected lane — and then into Cedar Point and its beach. • Building a new recreation center for city residents, with a focus on youth programming, somewhere in Sandusky; The rec center faces an all-important levy in Tuesday's election. If approved, this deal would help financially support the project. • Creating a water taxi system in downtown Sandusky, providing people with an additional way to access Cedar Point; A pending arrangement involves Sandusky and Cedar Fair swapping land: Sandusky would acquire the Boeckling Building and Jet Express pier in downtown, and Cedar Point would get the former Sandusky drive-in movie theater site along Cleveland Road (U.S. 6). Sandusky acquired the property in 2007 after receiving federal grant funds. • Generating funds to further advance economic development and destination-related investments in Sandusky; Officials want to provide businesses with grants and other financial incentive packages to strengthen Sandusky's economy on a year-round basis. • Supporting various programming at the Sandusky State Theatre once it reopens; The contribution fixates on bringing larger, more notable acts to the venue, particularly during wintertime. • Bolstering vital city services, namely for police, fire, parks, streets and recreation; It's unknown exactly what will get funded today, but officials put an emphasis on replacing outdated equipment for safety services, smoothing out roads and maintaining city parks. • Agreeing that Cedar Fair will maintain a corporate presence in Sandusky; It's unknown exactly how many people will stay and/or get hired, as Cedar Fair didn't reveal those numbers in the merger. "The 2021 agreement between Cedar Point and the city created a monumental opportunity to invest significant resources into Sandusky to benefit both Cedar Point and our residents," Orzech said. While some enhancements have already occurred, most — like the state theater, causeway, rec center and water taxi system — are in a development phase. "By raising the admissions and parking taxes, the city has increased revenue to invest in our neighborhoods, infrastructure and economic development projects while also assisting with projects that are mutually beneficial, such as rebuilding the Cedar Point Causeway," Orzech said. While there's still much "to be seen as to how the new Six Flags-Cedar Fair merger will play out, we intend to continue working with our partners at Cedar Point to move these projects forward that will both improve the lives of our residents and also position Cedar Point to be an even stronger tourist destination and economic driver," Orzech said. Details on the deal Here are some of the most important details coming out of Thursday's merger announcement: • The merger is expected to close in the first half of 2024, subject to shareholder and regulatory approvals, and customary closing conditions. • Upon closing of the transaction, the combined company will operate under the name Six Flags and trade under the ticker symbol FUN on the NYSE and will be structured as a C Corp. • Zimmerman will serve as president and CEO, and Selim Bassoul, of Six Flags, will be executive chairman of the board. Experienced leaders from Cedar Fair and Six Flags will join the executive team to ensure a seamless transition. • Cedar Fair unitholders will receive one share of common stock in the new combined company for each unit owned, while Six Flags shareholders will receive 0.58 shares of common stock in the new combined company for each share owned. • Cedar Fair's stock has dramatically increased this week, going from $34.16 a share to $39.48 per share midday Friday. • Following the close of the transaction, Cedar Fair unitholders will own approximately 51.2%, and Six Flags shareholders will own approximately 48.8% of the combined company's fully diluted share capital on a pro forma basis. • Combining Cedar Fair and Six Flags' capabilities promises a more robust operating platform, providing improved park offerings and efficiency. The companies aim to create a more engaging and immersive guest experience with expanded park access to season pass holders and an enhanced loyalty program. • The combined company is expected to generate substantial free cash flow, allowing investments in new rides, attractions, and enhanced guest services, while maximizing shareholder returns. • Anticipated annual synergies of $200 million, including administrative and operational cost savings of $120 million, are expected within two years of the transaction close. Additional revenue uplift of approximately $80 million is projected within three years.