| Publicly traded limited partnership Cedar | | | | |
| Fair (FUN) will acquire the Paramount Parks | | | | By far the two largest parks being acquired |
| business of CBS Corp (CBS) for approximately | | | | are Canada's Wonderland (located near |
| $1.25 billion. The five parks involved in the | | | | Toronto) and Kings Island (located near |
| deal are located near Cincinnati (OH), | | | | Cincinnati). |
| Richmond (VA), Charlotte (NC), Santa Clara | | | | |
| (CA), and Toronto. | | | | Cedar Fair's chairman Dick Kinzel said: |
| | | | |
| Cedar Fair already operates seven amusement | | | | This acquisition will provide exciting new |
| parks and five water parks, including the | | | | growth opportunities and the potential for |
| company's flagship Cedar Point property on | | | | meaningful incremental free cash flow as we |
| Lake Erie. The company intends to keep all | | | | realize $20-$30 million in annual cash flow |
| five properties. The deal will be financed by | | | | synergies over the next 3-5 years. It will |
| a $2 billion loan from Bear Stearns (BSC). | | | | also add significant geographic diversity to |
| The interest rate charged will be determined | | | | our portfolio of parks and improve our |
| once Cedar Fair's debt has been rated. | | | | position as one of the largest regional |
| | | | amusement park operators in the world. |
| The acquisition is quite large relative to | | | | |
| the size of Cedar Fair's existing business. | | | | The acquisition will require significant debt |
| Cedar Fair generated $569 million in revenues | | | | financing. However, the amusement park |
| during 2005. During the same time period, the | | | | business generally has a very high free cash |
| Paramount Parks properties generated $423 | | | | flow margin. Cedar Fair's existing properties |
| million in revenues. | | | | are excellent generators of free cash flow. |
| | | | The company makes large cash distributions to |
| In addition to the five parks, Cedar Fair | | | | unitholders; the current yield is somewhere |
| will receive Star Trek: The Experience (at | | | | around 6.85% (reminder: Cedar Fair is a |
| the Las Vegas Hilton) and the Nickelodeon | | | | Limited Partnership). Returns on both assets |
| license at the five Paramount Parks. | | | | and equity have generally been quite high. |
| | | | |
| The Paramount Parks properties encompass | | | | The deal is expected to close in the third |
| about 1,250 owned acres and 180 leased acres. | | | | quarter of 2006. Most analysts believe CBS |
| Based on past attendance, the five acquired | | | | will use the roughly $1 billion in after-tax |
| properties will likely be some of the most | | | | proceeds to buy back shares. |
| visited parks in the new Cedar Fair | | | | |
| portfolio. However, none of the new | | | | Over the last ten years, Cedar Fair has |
| properties is likely to eclipse Cedar Fair's | | | | compounded its book value per share at an |
| two most visited properties: Cedar Point and | | | | annual rate of 8.11% and earnings per share |
| Knott's Berry Farm. | | | | at an annual rate of 6.30%. |