Mergers, Acquisitions and Takeovers Case Study

Cedar Fair-Paramount Parks: Would the Acquisition payoff?

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Abstract:

Amidst the growing global amusement park industry, the US industry had a great role to play. Cedar Fair L.P., one of the key players of the US amusement park industry acquired Paramount Parks, subsidiary of CBS Corporation in June 2006 for $1.24 billion in cash. The acquisition was expected to increase the geographical diversity and attain cash flow synergy of $20 - $30 million over the next 3-5 years. The combined entity of Cedar Fair – Paramount Parks was expected to attract attendance of 25 million and generate revenues of $1 billion by 2007-09. In order to finance the acquisition, repay earlier debt and pay shareholder dividends, Cedar Fair planned to raise debt of $2 billion. As Cedar Fair already faced debt burden, financing the acquisition through debt was a concern.

The case discusses the expected benefits, opportunities of acquisition and highlights the financial and product integration challenges of Cedar Fair.

Pedagogical Objectives:

• To analyse the US amusement park industry and factors affecting on it
• To understand Market penetration and Product-line integration strategies through acquisition
• To understand fund management strategies to build cash flow synergies in case of acquisition.

Keywords : Mergers,Acquisitions,Alliances Case Study;Cedar Fair L.P.; Paramount Parks; Amusement Park Industry; Acquisition; Theme park; Walt Disney; Six Flags Inc.; Product line integration; CBS Corporation; Anheuser Busch Entertainment; Geographical diversity; Cash flow synergy; Public offering; International Association of Amusement Parks and Attractions; Attendance; Market share; Revenue; Interest expense; Dick Kinzel; Debt; Public bonds; Dividend; Innovativeness; Creativity'

Contents : 
Amusement Parks
Classification of Amusement Parks
The Acquisition
Product line integration
CBS Corporation
Key Players in the Amusement Industry
Location of 12 amusement parks of Cedar Fair