Investing.com - Cedar Fair fell on Friday after the theme park operator turned down a $4 billion offer from Six Flags Entertainment, claiming it was inadequate, Reuters reported, citing sources.
Cedar Fair rejected the offer as it believes it fails to compensate shareholders for giving up on the company’s tax-advantageous publicly traded partnership, Reuters said.
The partnership allows the company to pay out the bulk of its earnings to shareholders without first paying U.S. federal or state income taxes.
With Six Flags (NYSE:SIX) reportedly not expected to table a new offer, Cedar Fair (NYSE:FUN) fell 4% to $58.60, though remained above the price (about $58) seen when the story of the merger offer first broke.
Six Flags' interest in Cedar Fair comes as the company seeks to expand its footprint to bolster ticket pricing. Some on Wall Street had talked up the benefits to Six Flags of a tie-up with Cedar.
“We think there are numerous ways that an acquisition of FUN would benefit SIX,” Janney said in a note to clients. “While it is difficult to put exact numbers around a deal, we see benefits in three main buckets (1) general and administrative savings, (2) revenue synergies, and (3) other cost savings.”