The $8 billion Cedar Fair/Six Flags Merger is in for a wild ride, as the U.S. Department of Justice (DOJ) launches an antitrust review of the deal. The challenge to the merger arises after the DOJ and the Federal Trade Commission (FTC) finalized new merger guidelines that reduce the threshold for presumed illegality of horizontal mergers.
As previously reported in this column, the two amusement park giants plan to join in a merger of equals to create an amusement giant that “will operate a portfolio of 27 amusement parks, 15 water parks and 9 resort properties across 17 states in the U.S., Canada, and Mexico,” according to the companies’ joint press release. “The combined company will also have entertainment partnerships and a portfolio of beloved IP such as Looney Tunes, DC Comics, and PEANUTS to develop engaging new attractions enabled by compelling characters, environments, and storytelling.”
Since the deal was announced in November, however, the regulatory climate has shifted. On December 18, 2023, the DOJ and FTC departed from previous guidelines to place additional mergers in their crosshairs. Most significantly, the 2023 Merger Guidelines, “lower the threshold market concentration level at which the agencies would presume a merger to be illegal,” according to Paul Weiss. “The new guidelines also include a new presumption that a merger resulting in the merged firm having a market share greater than 30% would be illegal if it also resulted in a relatively modest increase in market concentration.”
Further, the agencies state their intention “to prevent those mergers that would entrench or extend a dominant position through exclusionary conduct, weakening competitive constraints, or otherwise harming the competitive process.” These rules cast a wide net – and many mergers are likely to become ensnared.
Since taking office, President Biden has vowed additional antitrust scrutiny, blaming rising prices in healthcare and other areas of the economy on a lack of competition. The enforcement-minded he appointed individuals to head the FTC have faced multiple legal setbacks as they pursue muscular antitrust policies and made high profile moves against large technology companies. The U.S.’s current approach has deviated further from Europe’s and regulators from both sides of the Atlantic failed to reconcile at last week’s competition policy conference last week in Brussels.
According to DealPulse’s comprehensive M&A database, which harnesses AI to track current and historical deals, Cedar Fair is advised by law firms Weil, Gotshal & Manges LLP and Squire Patton Boggs LLP, and financial advisor Perella Weinberg Partners LP, while Six Flags is advised by Kirkland & Ellis LLP and financial adviser Goldman Sachs & Co. LLC.