Visitors trip the Bayside Skyride at SeaWorld on July 20, 2021 in San Diego, California.
Daniel Knighton | Getty Pictures Leisure | Getty Pictures
Theme park consultants aren’t shocked that SeaWorld is seeking to purchase Cedar Honest, however the worth won’t be proper, but.
The corporate’s daring proposal, one that’s reportedly value $3.4 billion, would considerably strengthen SeaWorld’s foothold in an business that’s dominated by solely a handful of gamers.
“The extra we take into consideration this potential deal, the extra it makes complete sense to us,” Stifel analyst Steven Wieczynski wrote in a analysis notice revealed Tuesday.
Combining SeaWorld and Cedar Honest’s belongings, which might be greater than 20 parks, means SeaWorld would have the potential to generate $3.4 billion in income in 2023, he mentioned.
Cedar Honest is among the largest regional theme park operators on the planet, with a market cap of $2.82 billion. For comparability, SeaWorld has a market cap of $4.6 billion.
“In our opinion, [SeaWorld] has lacked a extra sturdy geographical footprint and lack of season go penetration,” Wieczynski wrote. “Buying [Cedar Fair] would give them a much bigger presence throughout North America and would permit them to extra successfully cross market a few of their greater belongings.”
SeaWorld, which additionally owns Busch Gardens and Sesame Place, has lengthy battled perceptions of its animal-based amusement enterprise. Including Cedar Honest’s parks, which embrace Knott’s Berry Farm and California Nice America, would diversify its portfolio and diminish its reliance on animal points of interest, Wieczynski mentioned.
SeaWorld would additionally profit from Cedar Honest’s undeveloped land portfolio, which incorporates round 1,400 acres round its theme parks. This might be used to develop resorts, sports activities complexes or water parks, amongst different ventures.
“Given the extraordinarily excessive limitations to entry (e.g., land availability, allowing and constructing restrictions, excessive building prices, and many others.) coupled with the sturdy regional loyalty created by seasonal/annual go subscriptions, we’ve all the time considered the regional theme park section as ripe for additional consolidation,” Eric Wold, analyst at B. Riley Securities, wrote in a analysis notice revealed Wednesday. “Particularly when enticing income and value synergies are considered to spice up returns.”
In recent times, there have been many makes an attempt by theme park chains to purchase one another out. In 2019, Cedar Honest rebuffed a $4 billion supply from Six Flags for round $70 per share. U.Ok.-based Merlin Entertainments, which owns Legoland and Madame Tussauds, quashed studies in 2017 that it was contemplating a bid for SeaWorld.
SeaWorld’s present bid reportedly presents Cedar Honest $60 per share, or an enterprise worth of round $5.8 billion. Expectations are that attendance charges will proceed to rise and even surpass prepandemic ranges by subsequent yr, which means the bid might be too low to entice Cedar Honest to agree.
“We consider buying [Cedar Fair] at $60 a share would characterize a really favorable deal for [SeaWorld] shareholders given the potential accretion that might be realized,” Wieczynski mentioned. “Based mostly on our math, we consider SeaWorld may supply upwards of $70 to $80 [a share] earlier than the deal would turn into much less priceless.”
Shares of Cedar Honest had been up almost 4% on Wednesday, reaching a 52-week excessive of $58.49.