Cedar Fair, the owner of Knott's Berry Farm and several Soak City water parks in Southern California, said Monday that it would buy five theme parks from CBS Corp. for $1.24 billion in cash.
With its purchase of CBS' Paramount Parks unit, Cedar Fair would nearly double its revenue and attendance.
The deal also would allow CBS to unload the theme parks -- including Great America in Santa Clara, Calif. -- that it inherited when it split with Viacom Inc. and focus on its broadcasting businesses.
Cedar Fair's resulting lineup of family-oriented properties would boost competition among regional theme parks, analysts said.
"I think we'll see a stronger new national player in Cedar Fair and a strongly resurgent Six Flags," said Dan Martin, vice president of Economic Research Associates in Chicago, referring to the owner of Magic Mountain and Hurricane Harbor in Valencia.
When the deal is complete, Sandusky, Ohio-based Cedar Fair would own and operate 12 amusement parks and six water parks with combined annual revenue of almost $1 billion and attendance topping 25 million.
"It's not every day that we have the opportunity to purchase five great family-oriented parks that fit extremely well with our existing parks," Richard L. Kinzel, Cedar Fair's chief executive, said in a conference call.
Kinzel said the purchase, which is expected to close in the third quarter, would allow Cedar Fair to diversify its assets across regional weather patterns and economic conditions. All the parks have additional land for future development.
Paramount owns a license to feature characters at its parks from Viacom-owned Nickelodeon, including SpongeBob SquarePants and Dora the Explorer. The four-year contract could be extended to other parks. No decision has been made on whether to change theming at the parks, a Cedar Fair spokeswoman said.
Until now, Cedar Fair has acquired parks gradually. Investors reacted positively, sending shares up 39 cents to $27.39.
After a slight drop in first-quarter revenue from 2005, analysts say, Cedar Fair will bounce back during the summer despite rising gasoline prices.
"We remain optimistic that the company will have a strong season," Robert G. Routh, an analyst with Jefferies & Co., wrote in a report.
To combat its flat attendance, he noted, Cedar Fair took an unorthodox approach this spring by cutting admission and concession prices.
That decision also won over theme park enthusiasts.
"There's a difference from paying a premium for convenience and being ripped off," said Eric Gieszl, editor of Ultimate Rollercoaster.com. "I think they realized they were alienating a segment of our society ... and now are reversing that trend. Maybe that will be adopted into the Paramount parks as well."
Cedar Fair and Paramount Parks are known as solid theme park companies with attractions that mix thrilling roller coasters and more child-friendly rides and entertainment.
As Cedar Fair nearly doubles its revenue, "they're going to be a bigger player in the marketplace," Geiszl said.
Cedar Fair, whose properties are not generally considered theme park destinations such as Disneyland and Universal Studios, will probably compete most directly with Six Flags, which operates 30 parks.
"I would say the competition is really Six Flags," Gieszl said. "They're going to have to step up to the plate and watch what Cedar Fair does."
Bear, Stearns & Co. will provide $2 billion in financing to enable Cedar Fair to fund the purchase and repay debt.
The amusement parks CBS is selling, in addition to Great America, are the flagship Kings Island in Cincinnati; Canada's Wonderland in Toronto; Kings Dominion in Richmond, Va.; and Carowinds in Charlotte, N.C.
In addition to Knott's in Buena Park, Cedar Fair owns Cedar Point in Sandusky and parks in Allentown, Pa.; Cleveland; Kansas City, Mo.; Muskegon, Mich.; and Shakopee, Minn.