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Apollo latest to buy amusement park with $2.4bn deal

The mega-firm is entering the amusement park sector, following several other firms that have acquired parks this year. But the sector has in some cases been a roller coaster for private equity returns.

Apollo Global Management is entering a market sector that has not always been kind to private equity firms after it agreed to buy Ohio-based amusement park Cedar Fair for $2.4 billion.

The deal, announced late Wednesday, will give Cedar Fair unitholders $11.50 in cash for each Cedar Fair limited partnership unit, representing a 43 percent premium over the park’s volume-weighted average closing unit price over the past 30 days. The Wall Street Journal reported Cedar Fair’s debt at $1.6 billion.

Apollo’s deal is just the latest in a string of amusement park acquisitions by private equity firms this year.

The Blackstone Group agreed in October to pay $2.7 billion, including $1 billion of equity, to buy Busch Entertainment from Anheuser-Busch InBev. Along with the equity slug, the deal would include a $950 million term loan, $450 million mezzanine financing and a $100 million revolving credit facility. Busch Entertainment runs 10 amusement parks in the US, including SeaWorld and Busch Gardens chains.

Blackstone has a collection of amusement parks, including Italy’s Gardaland, the UK’s Thorpe Park and four Legoland amusement parks in the US and Europe.

Goldman Sachs Capital Partners in March made a tender offer of ¥50,000 (€383; $559) per share, or about ¥140 billion, for the outstanding shares of Universal Studios Japan. Goldman already owned 41 percent of the theme park operator, having become its largest shareholder in 2006.

But amusement park deals have not always had happy endings for private investors. Hard Rock Park, a music-themed amusement park, liquidated earlier this year after failing to find a rescue buyer out of bankruptcy.

The Myrtle Beach, South Carolina-based amusement park opened in August 2008 with roughly $400 million in backing from investors including real estate developer Ziel Feldman and publicly-listed Israeli holding companies Africa Israel Investment and Polar Investments through Polar International Real Estate.

Also, Colony Capital, in a joint venture with Dune Capital Management, sunk $500 million into Meadowlands Xanadu, a massive retail and entertainment complex in New Jersey in 2007. The total value of the complex is set around $2 billion, but at least one of the loans on the project, a $200 million mezzanine loan originated by Lehman Brothers in 2007, is characterised as “troubled” by real estate data provider Real Capital Analytics. The designation means the loan is in or near default or restructuring.

Xanadu is expected to feature a 287-foot-tall Ferris wheel – the tallest in the US – called the Pepsi Globe. The plan envisions a 4.8 million-square-foot complex of entertainment, retail, office and hotel space including a minor league baseball park, an indoor ski facility, a large movie complex and a children’s entertainment village in addition to shops and restaurants.