Who Will Bite?

How many roller coasters can you fit in your pocket? If you've got enough change on you, Six Flags (NYSE: PKS  ) has some to sell. The chain of 30 regional amusement parks officially put itself on the bidding block last Thursday, a week after Dan Snyder launched a proxy battle to take over operating control of the company.

The stock soared on the news. Back in May, shares could be had for as little as $3.72 a stub; they have gone on to nearly double.

In my article last week, I wrote about the operator's untapped potential. So now that the company is officially for sale, who might step up to the plate? Snyder's Red Zone obviously leads the pack. He wouldn't have proposed a tender offer to grow his stake to a little more than a third of the company if he didn't believe it would be worth more down the road.

I'm fairly confident that Disney (NYSE: DIS  ) , the world's most lucrative theme-park operator, won't bite. Sure, it's tempting. Disney can spend as much as $1 billion to build a new park, so picking up 30 properties at a tenth of the price per park might sound like a good deal. But given the costs involved in getting the parks up to Disney's high standards and the potential for significant brand dilution, don't expect new CEO Bob Iger to take a gamble like this so early in his tenure. That said, I wouldn't be surprised if Disney inquires about buying Six Flags' Maryland location to dust off the America-themed park concept it abandoned years ago.

Cedar Fair (NYSE: FUN  ) is another possibility. Like Disney, the company behind Cedar Point might try to cherry-pick a property or two, but that's also a long shot. Cedar Fair is still reeling from last year's purchase of Six Flags' Worlds of Adventure, and the indigestion may make it hesitant to bid even for some of the smaller parks in the Six Flags family. I can't see this Income Investor newsletter pick being willing to go whole hog on Six Flags, but it may be receptive to a selective nibble here and there.

That brings us to Time Warner (NYSE: TWX  ) . The media giant previously owned many of the same parks in an earlier incarnation and its comic book and cartoon characters continue to be a prominent aspect of the Six Flags experience. One could argue that Stock Advisor selection Time Warner has the biggest reason to buy in so someone else doesn't boot Batman and Bugs Bunny off the lot, but it's also horrendous timing. The company is being pressured to unload assets to increase shareholder value.

What about Comcast (Nasdaq: CMCSA  ) ? The company made a bold, unsolicited offer for Disney last year. Yes, Disney owns juicy cable television properties like ESPN and the Disney Channel that would be highly lucrative to Comcast, but one has to imagine that Disney's theme parks may have also caught Comcast's eye. If you market to the masses, nothing beats a captive audience. Six Flags attracted 33 million guests last year and the turnstiles are clicking even faster this year. Even though Comcast is a long shot, don't rule it out just yet. See, one of its executives came from Disney -- not coincidentally, the one who championed the now-dead bid for the media giant. He knows the theme-park business well and no doubt realizes the value in Six Flags.

Anheuser-Busch (NYSE: BUD  ) -- an Inside Value recommendation -- is a no-brainer. The brewmeister already owns the Sea World and Busch Gardens parks. The parks offer the company an opportunity to market its products in a lively environment. It's not just clever brand marketing; the parks are also financially viable. Even though the company has sworn off park additions in the past, how can it not at least consider expanding its empire? With Six Flags open to a friendly merger and Anheuser-Busch already skilled in running parks, it's really just a question of how much the company is willing to pay.

Finally, we have Viacom (NYSE: VIA  ) , which owns the Paramount parks. Just as Time Warner used to rely on its parks to extend its studio characters, Paramount has tied rides to movie properties like Star Trek, Top Gun, and The Italian Job. Over the years, Paramount's kid areas have embraced the popular Nickelodeon and Nick Jr. franchises. With Six Flags, Paramount's parks would grow from 5 to 35 in one swoop. Alas, the timing doesn't feel exactly right here either. Viacom is in the process of splitting in two and Six Flags would be added weight at a time when Viacom is looking to slim down.

So what does the future hold? It's unclear. Snyder argues that Six Flags is a real-estate play, and that is partly true. The company's parks sit on approximately 7,500 acres of land, a lot of which is company-owned. However, going by the $125 million it received when it sold its 690-acre Ohio park to Cedar Fair last year, the math doesn't exactly translate to much of a markup beyond the company's debt load.

Still, some parks are also more successful than others. That's why a strategic divestiture may be in Six Flags' future. Existing park operators might be willing to bid on specific locations that make tactical and regional sense for them. Unfortunately, some of the lesser parks -- especially those sitting on valuable real estate -- may find themselves razed along the way.

It's bad timing even for Six Flags. The chain is finally getting its act together -- it is coming off its first profitable spring quarter since 2002 and park attendance has been growing over the past three quarters. Then again, it's that potential for a turnaround that may attract bidders. Done right, scooping up Six Flags at a fire-sale price is something that no respectable entertainment giant should scoff at. Who dares picks at these bones of steel and concrete? Stick around. The bidding process has only just begun.

Longtime Fool contributor Rick Munarriz loves to take his family to new amusement parks every summer. He practices what he preaches as he owns shares in Disney, Cedar Fair, and Six Flags.The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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