- Jana Partners is again urging the Six Flags board to explore a sale and wants it to hire investment bankers for a strategic review, according to a person familiar with the matter. The activist has targeted the company since last year and remains disappointed with its performance and turnaround efforts.
- Six Flags reported a 7% year-over-year decline in net revenue for the quarter ended June 28, with total attendance also falling. The stock traded at $12.31 late Wednesday morning in New York, giving a market value of about $1.3 billion after a 45% decline over the past year.
- Jana built its position alongside co-investors including Travis Kelce last year and sent a letter to the board in March pushing for both a sale and a new chair. The company agreed in March to divest seven non-core parks.
- The renewed demand comes while Six Flags faces lawsuits from riders alleging brain injuries after riding a roller coaster in Southern California, following a CNN investigation published last month. A company representative did not immediately respond to a request for comment.
What Happened?
President and chief executive John Reilly said at the time of the second quarter results that they demonstrated the company strategy of building a more engaged guest community and extracting more long-term value from each guest relationship. The Wall Street Journal first reported Jana latest push.
Why It Matters?
At roughly $1.3 billion, the market is valuing the combined Six Flags and Cedar Fair business at a level where any acquirer would be underwriting the parks as assets rather than paying for the operating business, since revenue and attendance are both declining and the equity has lost 45% in a year. That is the logic behind Jana push, and it is a reasonable one. The obstacle is the timing. Open litigation alleging brain injuries, amplified by a national broadcast investigation, is precisely the exposure that causes buyers to withdraw or demand indemnities and escrows, because the liability cannot be sized until the cases progress. Pressing for a banker-led process now means running an auction with an unquantified claim attached, which usually produces either no bids or discounted ones. An activist with a position held since last year has its own reasons to want a resolution quickly, and those reasons do not necessarily align with getting the best price. The March divestiture of seven non-core parks cuts the same way. Each disposal reduces what a whole-company buyer would be acquiring, so a sale process arriving after the portfolio has already been trimmed has less to offer than one begun before. For investors the practical question is whether the board opens a strategic review at all, since at this market capitalisation the universe of plausible buyers is limited and Jana leverage is correspondingly modest.
What Next?
The immediate signal is whether the board engages bankers or resists, and any announcement of a strategic review would be the first concrete movement since Jana March letter. Watch the litigation docket, because the number of claimants and the initial rulings will determine whether the exposure is quantifiable enough for a sale to proceed. Third quarter results will show whether the 7% revenue decline and falling attendance continued through the peak summer season, which is the most important operating period for the business and the clearest test of Reilly strategy. Any further park divestitures would indicate the board prefers piecemeal disposals to a whole-company sale. Also watch for Jana escalating to a proxy contest or a public letter, which is the usual next step when private pressure produces no response, and for whether it maintains or adds to its position through the period.
Affected Tickers and Coins: FUN
Source: Bloomberg
