The Six Flags-Cedar Fair merger is viewed favorably by analysts

Six Flags Entertainment (NYSE:SIX) and Cedar Fair (NYSE:FUN) capped off a multi-year period of M&A intrigue with a deal announcement on Thursday. Analysts are mostly favorable on the upside from the merger of equals. The new company will be called Six Flags and trade under the FUN symbol. The theme park giant will operate 27 amusement parks, 15 water parks, and nine resorts in the US, Canada and Mexico,

Jefferies views the theme park sector merger announcement to be positive for several reasons. Analyst David Katz said the combined geographic footprint, operating resources, financial profile, and real estate optionality will all improve. He noted the implied value for SIX based on the combined entity suggests considerable upside over time. Crucially, the breadth and depth of assets combined are said to provide for more opportunities for sale leaseback of existing assets or growth through lease financing. "In short, we believe this is a positive event for SIX holders and the shares should react positively," he advised.

Macquarie analyst Paul Golding said a combined SIX-FUN footprint could potentially make a national pass network offering quite compelling for visitors relative to the destination parks that would be outside its network, while some shared locales could also potentially boost uptake.

Truist analyst Michael Swartz crunched the numbers to find 30% to 80% upside for the combined company after taking into account the pro-forma P&L, current capital structures, and historical valuation ranges for regional park operators.

Six Flags Entertainment (SIX) showed a 0.78% gain at 10:10 a.m., while Cedar Fair (FUN) was down 4.05%. SeaWorld Entertainment (SEAS) rose 2.05% despite being left without a merger partner.