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Six Flags Entertainment Corporation (NYSE:FUN) rose 4.5% on its first day of trading after the merger of equals between the old Six Flags Entertainment and Cedar Fair became final. Each park in the combined company’s portfolio will retain their legacy branding, with no changes to park names currently being planned or contemplated.
“Our merger establishes a new Six Flags Entertainment Corporation with a highly diversified footprint and robust operating model, enhancing park offerings and performance through the complementary portfolio of attractive assets and intellectual property from each of Cedar Fair and the former Six Flags,” noted CEO Richard Zimmerman. “The combination also enhances the financial profile of the company with strong cash flow generation to accelerate investments in our parks to delight our guests, driving increased levels of demand and in-park value and spending,” he added.
On Wall Street, Morgan Stanley has an Overweight rating on the new theme park stock. The bull rating is underpinned by the firm’s view that current valuation still under-appreciates the growth potential of the pro forma company. In addition to highly achievable cost synergies, Morgan Stanley pointed to opportunities for the new company to continue executing on an attendance recovery within the legacy Six Flags footprint. Looking ahead, analyst Thomas Yeh and his team see a clear opportunity for the pro forma business to manage its expense base, while still investing in growth. Morgan Stanley’s price target of $65 assumes an ~9X forward EBITDA multiple.