There's a new flag at Six Flags (NYSE:PKS). It's white, signaling the regional amusement park operator's surrender to the whims of the market. Yesterday, the company announced that it was putting itself up for sale. This comes a week after Washington Redskins owner Dan Snyder, no stranger to acquisitions after nearly five dozen deals in his young life, announced his intention to grow his minority stake in the company. He is also gunning to shake up the company's board and replace its CEO.
Since 1999, Six Flags has had a rough run. It carries more than $2 billion in debt, and that's the kind of leverage that demands near-flawless execution. The company has failed on that front. There was a fair reason to believe that it was on the right path when it posted a small profit in its June quarter. It was the first time the company had closed out its second quarter in the black since 2002. The chain had also reported healthy attendance gains over the past three quarters.
Snyder's plan to grow his stake to nearly 35% through a tender offer of $6.50 a share seems dead in the water now that Six Flags is open to a new suitor buying the entire company. Snyder will be in the running, of course. Now that the acquisition process has turned friendly, he is likely to drum up some kind of offer, even if he has to team up with a private equity firm in the process.
Who else will bid for Six Flags? That's the big question for shareholders. As even an eBay novice can tell you, the best way to fetch a higher price on an auction is to line up more than one potential bidder. However, the logical candidates may have their hands tied at the moment, and the market is likely to overlook some of the dark-horse candidates that may make a run for Six Flags.
Come back Tuesday, and I'll handicap the odds on what companies are likely to make an offer. It won't be just a collection of rival park operators -- some of the more intriguing possibilities there are the media conglomerates that can make the most of a captive audience of 33 million guests a year. Disney (NYSE:DIS), Viacom's (NYSE:VIA) Paramount, and General Electric's (NYSE:GE) Universal all have theme-park interests. With its network of 30 regional parks, Six Flags can help a company get the word out in a hurry.
The important thing to remember is that this isn't going to be a story that develops over the weekend. It will take weeks, if not months, before we begin to see who the ultimate players will be. The potential is clearly there if the right company is able to turn Six Flags around. So buckle your seatbelts. Pull down the lap bar. It's going to be a white-knuckled thrill ride.
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Longtime Fool contributor Rick Munarriz loves to take his family to visit amusement parks over the summer. He owns shares in Six Flags and Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
