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Mergers, Acquisitions, Alliances and Synergies Case Study
Case Title:
Cedar Fair-Paramount Parks: Would the Acquisition payoff?
Publication Year : 2006
Authors: Pooja Dave, Rahul Patel, Anadan Pillai, Joel Sarosh Thadamalla
Industry: Amusement Park Industry
Region: US
Case Code: MAA0113A
Teaching Note: Not Available
Structured Assignment: Not Available
OR
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
