Wall Street won't have Cedar Fair (NYSE:FUN) -- home to the coolest ticker symbol in the amusement-park industry -- to kick around much longer. The regional operator has agreed to be acquired by an affiliate of private-equity giant Apollo Global Management.
Cedar Fair investors will be cashed out at $11.50 a unit if the deal goes through. The $2.4 billion proposal represents a 27% premium to Cedar Fair's close yesterday, but that's a far cry from what it was worth in its prime.
Income Investor newsletter subscribers will recall the park chain as being a recommendation from June of 2005 through the summer of 2008. The high yield was a clear attraction to the dividend-focused newsletter service, but flat attendance, uninspiring fiscal performance, and the unsettling digestive process of the Paramount chain it acquired from CBS (NYSE:CBS) sealed its fate as a recommendation removal.
Subscribers were privy to a small gain in those three years, and bowing out in the low $20s was twice as much as what today's investors will get.
Unfortunately for me, I'm one of today's investors. As a huge fan of the company's flagship Cedar Point and Knott's Berry Farm parks, I've put my money where my roller coasters are as a unitholder.
I should have probably followed my gut instinct and bolted past the exit turnstiles three years ago, when Cedar Fair stopped rewarding unitholders with juicy admission and lodging discounts. That marked the first step down in the process of desensitizing itself to its fan base.
The amusement-park industry is changing, for better or worse. Private-equity firms and asset managers such as Apollo and Blackstone Group (NYSE:BX) have snapped up many of the sputtering parks. By this time next year, Comcast (NASDAQ:CMCSA) -- yes, Comcast -- will be a force in this space if the deal for General Electric's (NYSE:GE) NBC Universal goes through.
With Six Flags in bankruptcy proceedings, the pure park plays are disappearing. Ski-resort operator Vail Resorts (NYSE:MTN) and indoor-waterpark operator Great Wolf Resorts (NASDAQ:WOLF) are possible plays for family leisure, but they're imperfect matches. And that's a shame, because regional parks should be one of the biggest beneficiaries of the economic recovery.
Cedar Fair either sold too soon -- or too late -- for its own good.
