One of Cedar Fair's largest investors has sent a letter to the U.S. amusement park operator to complain that the company is stripping shareholders from a say on its planned $8 billion merger with Six Flags Entertainment Corp (SIX.N).
Neuberger Berman, which owns about 3% of Cedar Fair (FUN.N), told Reuters it wrote to the company on Dec. 4 to complain that it structured the deal so that shareholders will not get to vote on it as Six Flags shareholders will.
This was achieved, according to Neuberger, by having Six Flags pay out a $85 million special dividend that shrunk its size and allowed Cedar Fair to be deemed the acquirer in the transaction. Had it been deemed the acquisition target, change-of-control provisions in Cedar Fair's bylaws would have required it to hold a shareholder vote on the deal.
Neuberger Berman also said the breakup fee structure discourages Cedar Fair from exploring offers from other parties. It added that Cedar Fair shareholders who enjoyed tax benefits because the company was structured as a partnership will lose out because the combined entity will be taxed as a corporation.
Cedar Fair declined to comment. Six Flags did not immediately respond to requests for comment.
Neuberger Berman managing director Doug Rachlin said Cedar Fair responded to his letter by holding a call with him last week to hear him out, but that the company has taken no actions since.
The companies say that the appeal to visitors of the combined park portfolio will boost revenue and cash flow, helping the parks compete with rivals like SeaWorld Entertainment (SEAS.N) and Disney's (DIS.N) theme parks.
Since news of the planned deal broke in early November, Cedar Fair shares have climbed about 14%.
Neuberger Berman has been an investor in Cedar Fair for almost three decades.
In 2010, it and other investors successfully opposed a takeover of Cedar Fair by private equity firm Apollo Management. The investors said Apollo's offer undervalued the company.
