SeaWorld Entertainment has made an unsolicited offer to purchase longtime theme park company Cedar Fair, which owns a dozen amusement parks, including Knott's Berry Farm in Orange County.
Cedar Fair, in a statement released Tuesday, confirmed that it had received what it described as a non-binding proposal from SeaWorld, which owns 12 parks, including the San Diego marine park.
"Consistent with its fiduciary duties, and in consultation with its independent legal and financial advisors, the Cedar Fair Board of Directors will carefully review and consider the proposal to determine the course of action that it believes is in the best interest of the Company and its unitholders," the company said.
SeaWorld, when contacted by the U-T, said it did "not have a comment at this time."
First reporting the offer on Tuesday was Bloomberg, which said the proposed acquisition is valued at $3.4 billion, according to unnamed sources familiar with the deal. In addition to theme parks, Ohio-based Cedar Fair also owns and operates nine water parks, as well as more than a dozen lodging properties.
News of the potential acquisition comes as Orlando-based SeaWorld Entertainment continues to recover from devastating losses incurred when the pandemic forced the prolonged closure of its parks. In its most recent earnings report released last November, SeaWorld attracted 7.2 million guests in the third quarter of 2021 ending Sept. 30. That's 5.7 million more than in 2020, although attendance still fell short by 900,000 compared with the same period in 2019.
Financial performance was also a bright spot, with third-quarter revenue coming in at $521.2 million, up 10 percent from 2019. Both before and since the pandemic, SeaWorld stock has seen meteoric growth, rising from a low of $11 just three years ago to nearly $61 on Tuesday.
SeaWorld San Diego also is regaining its financial footing, with visitation last summer on par with numbers seen before the pandemic, according to new park president Jim Lake. It is preparing to open in March the long-delayed debut of its newest coaster, Emperor, as well as a new theme park, Sesame Place, which is taking over the former Aquatica water park in Chula Vista.
A merger of the two companies makes sense for SeaWorld, given its move in recent years away from its heavy emphasis on animal attractions to a wider focus on thrill rides and attractions, says theme park consultant Dennis Speigel.
"No. 1, it's a product diversification where you've already seen them adding roller coaster after roller coaster," said Speigel, founder of Ohio-based International Theme Park Services. "And No. 2, it's a move geographically where they'd be spreading their parks across the United States. Currently, SeaWorld is more coastal (California and Florida), plus Texas, so this would give them a huge footprint across the U.S."
Another plus for SeaWorld, Speigel said, is the strength of Cedar Fair's organization and leadership. SeaWorld, on the other hand, has seen more turmoil among its top executives. When current CEO Marc Swanson was promoted to the top spot last year, he became the company's fifth chief executive since 2014 when then CEO Jim Atchison stepped down amid steep attendance and revenue declines fueled by the anti-captivity documentary "Blackfish."
Cedar Fair's stock price saw a significant uptick following news of a possible acquisition. It closed at $56.25 a share, up more than 13 percent for the day. SeaWorld stock ended the day at $61.12, a more modest increase of 2.6 percent.
