Cedar Fair (FUN -0.08%) is alone again. Naturally. SeaWorld Entertainment (SEAS -0.59%) put out the briefest of statements after Tuesday's market close, confirming that its $3.4 billion offer to buy the regional amusement park operator had been rebuffed. "In response to inquiries from various stakeholders, we confirm that our offer to acquire Cedar Fair was rejected," the company said. "Unfortunately, we do not see a path to a transaction."
Cedar Fair shooting down the unsolicited offer isn't a surprise. Financial analysts were generally pleased with the proposed pairing, but they also felt that SeaWorld would have to raise its offer to get it done. Both stocks started moving higher when the deal was announced -- including sending Cedar Fair north of the $60 buyout price -- suggesting that the market would be fine with SeaWorld sweetening its bid. Both stocks opening lower on Wednesday as a result of SeaWorld presumably giving up on a deal also speaks volumes. With SeaWorld no longer seeing a "path to a transaction" investors are left to wonder if SeaWorld never had an intention of making a second offer or if Cedar Fair is making it clear that it will require a lot more than SeaWorld is willing to pay to make it happen.
The runaway bride went on to report fresh financials on Wednesday morning, and it's easier to see why it was wearing running shoes under the gown. Cedar Fair posted better-than-expected results for the seasonally sleepy fourth quarter. The $350.9 million in revenue it generated in the final three months of the year topped the $305 million that analysts were expecting. More importantly, it was well ahead of where it was before the pandemic for the same quarter. Cedar Fair recorded just $257.2 million on the top line in the fourth quarter of 2019.
One would normally be cautioned to not read too much into a seasonal amusement park operator's fourth-quarter performance, but Cedar Fair did the same thing in the seasonally potent third quarter that catches the lion's share of the peak summer period. Last year was a tale of two halves for Cedar Fair, and it clearly excelled on the way to the 2021 finish line.
Sizing up the entire year, the $1.34 billion it delivered in net revenue was 9% less than what it rang up in 2019, but it did so on 21% fewer operating days (1,765 versus 2,224). Double-digit increases per capita across all key revenue categories -- including a refreshing 28% surge for in-park spending per guest -- bode well for the future of Cedar Fair as well as the industry.
It's easy to see why Cedar Fair would balk at the $3.4 billion offer, especially now that we see that it has momentum on its side. Folks are willing to spend more for a day at a national theme park or regional amusement park, and that's why we've seen record or near-record fourth quarters from three of the five major publicly traded players in this market. SeaWorld and Six Flags Entertainment should cap off the industry's earnings season with strong numbers next week.
Cedar Fair had reportedly shot down a $4 billion offer to be acquired by Six Flags three years ago. Why would it have settled for $3.4 billion when its business is trending above where it was in 2019? It's not as if the next potential suitor is going to come in at $2.8 billion three years from now. The industry is ascending among leisure stocks, and a pairing would've been great, but SeaWorld was either too cheap or too late. A deal to cash Cedar Fair unit holders at $60 would've been a welcome sight in the darkest stretches of the pandemic of 2020 and even during the first half of last year. That coaster train has sailed.