Shares of theme park behemoths Six Flags (NYSE:SIX) Entertainment and Cedar Fair (NYSE:FUN) saw significant gains on Wednesday, amid discussions of a potential merger through an equity swap. The move arrives as a possible solution to the companies' pandemic and weather-related hurdles. Six Flags' stock price climbed 5.5%, while Cedar Fair's shares experienced a 7.8% leap.
Six Flags, under the leadership of industry newcomer Selim Bassoul, operates 27 amusement parks. Cedar Fair, led by veteran executive Richard Zimmerman, commands a larger market cap at $1.95 billion compared to Six Flags' $1.74 billion, largely due to its ownership of hotels near its parks. The structure of leadership following the proposed merger remains undetermined.
Despite facing challenges, both companies have managed to attain mild profitability. Six Flags has seen increased attendance yet less spending per capita, while Cedar Fair has reported slightly lower attendance but higher spending per capita.
The potential merger could trigger a considerable shift in the theme park industry and is being monitored closely by investors and industry insiders alike.
InvestingPro Insights
InvestingPro real-time data indicates that Six Flags Entertainment has a market cap of $1.76 billion USD and a P/E ratio of 21.85. The company has shown a significant return over the last week with a 1 week price total return of 8.92%. InvestingPro Tips suggest that the company's strong earnings should allow for continued dividend payments and predicts profitability for the current year, despite the company's short term obligations exceeding their liquid assets.
On the other hand, Cedar Fair commands a larger market cap at $1.92 billion USD and a lower P/E ratio of 7.67. The company's management has been aggressively buying back shares, leading to a high shareholder yield. However, InvestingPro Tips highlight that the company's revenue growth has been slowing down recently, and four analysts have revised their earnings downwards for the upcoming period.
Investors can find more detailed insights and additional InvestingPro Tips by visiting the respective company pages on InvestingPro. These insights offer valuable information for those interested in the potential merger between Six Flags Entertainment and Cedar Fair, providing a deeper understanding of each company's financial health and market position.
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