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Published: Wednesday, 3/10/2010

Cedar Fair sale battle shifts

BY JON CHAVEZ
BLADE BUSINESS WRITER

The battle to decide the future of Cedar Fair LP took another twist yesterday with the majority shareholder stating it no longer seeks to buy more shares of the company at above-market prices - an offer it sent to other shareholders two weeks ago.

That could mean the majority shareholder believes it now has the votes to block the sale of Cedar Fair to Apollo Global Management LLC of New York.

It would take just 34 percent of shares cast to scuttle the $2.4 billion sale. Opponents say the $11.50-a-share purchase price is too low. The election is scheduled Tuesday in Sandusky.

Private investment funds Q4 Funding and Q Funding III, both based in Fort Worth and controlled by investor Geoffrey Raynor, hold 18.1 percent of Cedar Fair's stock.

Rick Munarriz, an analyst for the Motley Fool online investing site, said the Texas funds' decision to stop buying shares now means one of two things.

"No. 1, they are saying, 'We have the votes we need, or No. 2, 'We're not going to throw good money after bad,'•" Mr. Munarriz said. "Those, to me, are the only two scenarios that I can picture with them phrasing things the way they have."

Tom Johnson, a spokesman for the funds, said they no longer are in the market for more shares.

He declined to comment further. The funds had sought from other individual shareholders the right to vote their shares next week.

Also opposing the deal is the second-largest shareholder, mutual fund Neuberger Berman LLC, with 9.6 percent of shares.

The Knott family, founders of Knott's Berry Farm in California, which Cedar Fair acquired in 1997, holds 3.6 percent of the stock. A family member has stated displeasure with the sale but has not indicated how the family will vote its shares.

Stacy Frole, Cedar Fair director of investor relations, said the company "continues to move forward with our transaction with Apollo and we still think the $11.50 offer is an attractive price."

Mr. Munarriz said it's hard to know what will happen. "If this fails, I don't think Apollo is going to come back with a higher offer," he said. "It's much easier for them to just walk away."

Last week an independent investment advisory firm, Egan-Jones Proxy Services, issued a report recommending shareholders vote for the sale to Apollo, concluding that it is the best way to maximize shareholder value.

Yesterday, the Texas funds issued a statement noting that three other independent proxy advisory firms have taken an opposing stance.

RiskMetrics Group Inc., Proxy Governance Inc., and Glass Lewis & Co. LLC have advised clients to vote against the sale to Apollo.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.



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