© Reuters. FILE PHOTO: People ride a roller coaster at Six Flags Magic Mountain amusement park on the first day of opening, as the coronavirus disease (COVID-19) continues, in Valencia, California, U.S., April 1, 2021. REUTERS/Lucy Nicholson
(Reuters) -U.S. amusement park operators Cedar Fair (NYSE:) and Six Flags (NYSE:) Entertainment on Thursday agreed to merge to scale their business amid an economic slowdown that has weighed on leisure spending.
Through the deal, the regional park operators are hoping to get a stronger foothold and “a strong revenue and cash flow generation profile” amid competition from rivals like SeaWorld (NYSE:) Entertainment and Disney’s theme parks.
The tie-up is expected to ” … mitigate the impact of seasonality and reduce earnings volatility through a more balanced presence in year-round operating climates,” the parties said in a statement.
The combined company will operate 27 amusement parks, 15 water parks and 9 resort properties across 17 U.S. states, Canada and Mexico.
Each Six Flags share will be worth 0.5800 shares of the combined company, which values Six Flags at about $2 billion.
That is higher than the company’s equity value of $1.75 billion as of Wednesday’s close. Cedar Fair was valued at about $1.92 billion as of Wednesday.
That was after a roughly 6% jump in the stock value of each company following a Reuters report that the duo were exploring a potential merger. The stocks have lost 10% of their value so far this year.
The merger is expected to close in the first half of 2024, following which Cedar Fair shareholders will own about 51.2% of the combined company and Six Flags shareholders the rest.
The new company will trade under the Six Flags ticker on the New York Stock Exchange.
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