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