.: Cedar Fair to Buy Paramount Parks
By:Geoff Gannon
Copyright 2006 Geoff Gannon
Publicly traded limited partnership Cedar Fair (FUN) will acquire the Paramount Parks business of CBS Corp (CBS) for approximately $1.25 billion. The five parks involved in the deal are located near Cincinnati (OH), Richmond (VA), Charlotte (NC), Santa Clara (CA), and Toronto.
Cedar Fair already operates seven amusement parks and five water parks, including the company’s flagship Cedar Point property on Lake Erie. The company intends to keep all five properties. The deal will be financed by a $2 billion loan from Bear Stearns (BSC). The interest rate charged will be determined once Cedar Fair’s debt has been rated.
The acquisition is quite large relative to the size of Cedar Fair’s existing business. Cedar Fair generated $569 million in revenues during 2005. During the same time period, the Paramount Parks properties generated $423 million in revenues.
In addition to the five parks, Cedar Fair will receive Star Trek: The Experience (at the Las Vegas Hilton) and the Nickelodeon license at the five Paramount Parks.
The Paramount Parks properties encompass about 1,250 owned acres and 180 leased acres. Based on past attendance, the five acquired properties will likely be some of the most visited parks in the new Cedar Fair portfolio. However, none of the new properties is likely to eclipse Cedar Fair’s two most visited properties: Cedar Point and Knott’s Berry Farm.
By far the two largest parks being acquired are Canada’s Wonderland (located near Toronto) and Kings Island (located near Cincinnati).
Cedar Fair’s chairman Dick Kinzel said:
"This acquisition will provide exciting new growth opportunities and the potential for meaningful incremental free cash flow as we realize $20-$30 million in annual cash flow synergies over the next 3-5 years. It will also add significant geographic diversity to our portfolio of parks and improve our position as one of the largest regional amusement park operators in the world."
The acquisition will require significant debt financing. However, the amusement park business generally has a very high free cash flow margin. Cedar Fair’s existing properties are excellent generators of free cash flow. The company makes large cash distributions to unitholders; the current yield is somewhere around 6.85% (reminder: Cedar Fair is a Limited Partnership). Returns on both assets and equity have generally been quite high.
The deal is expected to close in the third quarter of 2006. Most analysts believe CBS will use the roughly $1 billion in after-tax proceeds to buy back shares.
Over the last ten years, Cedar Fair has compounded its book value per share at an annual rate of 8.11% and earnings per share at an annual rate of 6.30%.
Article keywords: FUN, CBS, Cedar, Fair, parks, paramount, stock, stocks, market, investing
Article Source: http://www.articles32.com
Geoff Gannon writes a daily value investing blog and produces a twice weekly (half hour) value investing podcast at:
www.gannononinvesting.com
.: New Finance Articles
1). Stockbrokers: Who Are They How Do They Work
Who do stockbrokers work for? There are various answers to that question. To begin with, a stockbroker buys and sells stocks on behalf of their clients or their company. A stockbroker is also an advisor, a researcher, a compiler of investment information, and a sales person. A stockbroker can also be a support mechanism to a new public company or an old Fortune 100 company.
2). Reading Commodity Prices - Is There An Easy Way To Read These Prices?
When you first enter the world of commodities, you may find that reading prices can be a challenge. You may not know what to consider when it comes to these types of prices and which prices you should even be reading in the first place. Read on to uncover the secrets of reading commodity prices ...
3). No Cost Financing For Home Owners
What is No Cost Finacing for Home Owners and when is it a good option.
4). Benefits Of Direct Debit Payments
Direct Debit is a system by which monthly payments are taken directly from your account
5). How You Can Remove A CCJ And Repair Your Credit History
Even though County Court Judgements (CCJs) are quite common in todays society they can still effect your ability to get a mortgage or loan.
6). How To Select A Commercial Collections Agency
Collecting money is harder than it looks. It takes more than a couple of ledgers, calculators and assistants to get this kind of task over and done with. This is especially the case if you have a running business which also calls for a significant amount of your attention.
7). Learn Technical Analysis - How Can Expectancy Increase Profits?
When it comes to explaining expectancy in the market, you must first look at financial analysis as well as technical analysis. These two types of analysis are usually combined together to gain information on future trades. Read on to find out more ...
.: Top Finance Articles
1). Fade The Gap And Make $$'s Every Day In Stocks
Avery Horton “The Rumpled One” is a traders’ trader who makes a great income day trading a very simple day trading method called “fading the gap.”
If you could trade a method that took you less than 30 minutes to perform in the morning for $0.30 to $1 profit with 80% accuracy….would you trade it?
When you can trade 1,000+ shares in a stock that is $300 to $1,000 profit on each successful trade EVERY DAY.
2). The Good, the Bad, and the Ugly: Why Your Broker May Not Be Recommending The Most Competitive Annuity
There are over two thousand life insurance companies offering over fifteen thousand different annuities, and they run the gamut from horrific (I wouldn’t offer it to an enemy) to outstanding (I own it myself, and recommended it my parents). To make matters more confusing, annuities can be very complicated, with lots of different hard-to-understand variations.
3). The Secret Formula To Picking A Million Dollar Forex Trading Strategies
All successful traders have forex trading strategies that they follow to make profitable trades. These forex trading strategies are generally based on a strategy that allows them to find good trades. And the strategy is based on some form of market analysis. Successful traders need some way to interpret and even predict the movements of the market.
4). Top Ten Tips for Getting Out of Debt
Top Ten Tips for Getting Out of Debt
5). Five Rules to Consider Before Filing Banckruptcy
Five different rules to consider when trying to decide if filing bankruptcy is the right move. If bankruptcy is the right move, which chapter should you file?
6). Who Is Responsible For Closing Costs
Buying or selling a home is a euphoric experience for both of the parties involved. This euphoria can cool when you learn which party is responsible for the closing costs.
Who Is Responsible For Closing Costs
When looking to buy or sell a home, every person eventually arrives at the question of funding closing costs on the transaction. To put it simply, both buyers and sellers typically are responsible for some of the closing costs.
7). Locate And Find Debtors With A Credit Collection Agency
It can be a frustrating experience trying to collect a debt from a customer who just seems unwilling to pay. Letters sent to their address go ignored, and phone calls are answered with empty promises of payment. While this is certainly a bad scenario, what if a customer who owes you money just disappears? It is possible to locate and find debtors with a credit collection agency, and in this article we’ll explain to you the methods behind their tracking.