Six Flags offers are on low side
Initial bids for a group of Six Flags Inc. theme parks including the sprawling Magic Mountain in Valencia are said to have come in lower than expected.
The company is selling the properties to trim its $2.1 billion in debt.
Buyout firm MidOcean Partners, theme park operator Herschend Family Entertainment Corp. and CNL Financial Group were among the bidders for all or some of the six parks put up for sale, Bloomberg News reported Friday, citing people who had been briefed on the bidding.
Of the three bidders, CNL was the only one to offer more than $650 million for the parks, the sources said.
The company needs to net more than $800 million from the sale to make its debt load manageable, according to industry analysts.
The nation’s second-largest theme park operator announced in June that it intended to sell some of its parks to other companies or real estate developers.
Some Valencia residents and businesspeople, including the Santa Clarita Valley Chamber of Commerce, had feared that Magic Mountain would be sold to developers and dismantled. The chamber has said the amusement park helps the area’s economic development.
At least one of the suitors -- Atlanta-based Herschend -- did not include Magic Mountain in its bid.
“We continue to do research on the selected Six Flags properties. Magic Mountain is not specifically involved in our negotiations,” said Lisa Rau, spokeswoman for Herschend.
The company operates 17 properties in seven states, including Dolly Parton’s Dollywood in Pigeon Forge, Tenn.
Herschend’s exclusion of the roller-coaster-intensive park is likely to hurt its bid because Six Flags seems intent on selling the six properties as a group, said David Miller, an analyst at Sanders Morris Harris in Los Angeles.
Miller said he expected the six parks and an additional property in Oklahoma City to sell for $750 million to $850 million.
Miller said it was also unlikely that Magic Mountain, which draws 2.5 million to 3 million visitors a year, would be sold to real estate developers because of regulatory and environmental hurdles.
“The park will stay open,” he said. “The last thing the company wants is a sale of real estate under the park.”
Six Flags spokeswoman Wendy Goldberg declined to comment. Representatives of MidOcean Partners and CNL Financial Group did not return calls seeking comment.
Shares of New York-based Six Flags fell 19 cents, or 3%, to $5.99 on the news. The stock has fallen 85% from its high in May 1999.
Six Flags has lost $884 million over the last seven years amid falling attendance and increased spending on new attractions.
Washington Redskins owner Daniel Snyder took control of the ailing company in December and brought in Mark Shapiro, a former ESPN television producer, as chief executive.
Shapiro has raised admission prices and focused on making the parks more family-friendly by banning smoking, and instituting a code of conduct for visitors.
Bloomberg News was used in compiling this report.