JEREMY WADSWORTH Enlarge
A last-minute decision to postpone a vote on the $2.4 billion sale of Cedar Fair LP to private-equity firm Apollo Global Management was a clear signal that shareholders were about to reject the deal, analysts said yesterday.
But whether a three-week delay can change that situation and whether Apollo wants to buy Cedar Fair badly enough to increase its $11.50-a-share purchase offer are mysteries.
"I had written in the past that I thought the 'no' votes were growing in number and I thought it was likely the 'no' votes were gaining favor enough to defeat the deal," said Jeff Thomison, an analyst with Hilliard Lyons.
"I think a higher offer from Apollo would change some minds. But I have no insight as to whether one might be coming."
There were no announcements yesterday that Apollo was increasing its offer, which some critics of the purchase agreement said was needed.
Shortly before 9:30 p.m. Monday, less than 12 hours before the shareholders were to vote on the proposed deal, Cedar Fair scrambled to announce that the special meeting was postponed until April 8.
It was a surprise to some, including individual shareholders who showed up for the meeting yesterday morning. But industry scuttlebutt Monday indicated a postponement was possible, with thoughts that Apollo might raise its offer. Within hours before the delay was announced, Cedar Fair officials had declined to say that was possible.
The Sandusky company, which owns Cedar Point and 10 other amusement parks as well as six outdoor water parks, said it was delaying the meeting to give it more time to solicit more votes and allow shareholders more time to consider the proposed acquisition by the New York private-equity firm.
Until the rescheduled meeting, shareholders can vote their units (shares) or change those previously cast. Unless two-thirds of Cedar Fair's 55.2 million shares are cast in favor of the deal it will fail.
But two large shareholders controlling 27 percent of shares opposed the deal, arguing that Apollo's $11.50-a-share offer was not high enough.
Also, any vote not cast counted as a "no," so stockholders not returning their ballots would go against approval of the transaction.
The postponement had no affect on the stock, which fell 4 cents yesterday to $12.20 a share on the New York Stock Exchange. On Monday, the share price climbed 10 percent on speculation that Apollo might raise its offer.
If the purchase is approved, Cedar Fair would be taken over and no longer have public stock.
Some industry experts thought the deal has been in trouble for a few weeks, after two institutional shareholders with 28 percent of the stock came out against it.
They needed an additional 7 percent or so to scuttle the deal.
But it was Apollo which may have realized the deal was in trouble late Monday and requested the postponement, according to a source familiar with the deal.
Steven Davidoff, a mergers expert, former corporate lawyer, and a law professor at the University of Connecticut, said a postponement gave the parties involved more time to try to gain support for the deal.
Cedar Fair spokesman Stacy Frole said the company plans to keep Feb. 12 as the date of record upon which shareholders must have had stock to vote by April 8.
Also, she said, Apollo's $11.50-a-share offer still stands.
Opinions by industry experts and shareholders are mixed on whether Apollo will now walk away or increase its purchase offer.
Mr. Davidoff said he was "skeptical" of a higher offer. Other experts weren't sure whether Apollo would drop the purchase attempt.
Among the shareholders who showed up at the Sandusky State Theater yesterday, unaware the meeting was canceled, was Don Alter of Elmore.
He said in an e-mail that "many of us believe we are being taken advantage of, and treated without respect, even though we are still the legal owners of the company."
Contact Jon Chavez at:
or 419-724-6128.32.01572 -87.96284