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'Deal Professor': Several possibilities in Cedar Fair-Apollo endgame

Tom Jackson • Mar 7, 2010 at 5:49 PM


What happens next with Apollo's planned takeover of Cedar Fair? Only Apollo knows -- and it isn't talking yet.

As a March 16 meeting approaches that's supposed to settle the fate of Apollo Global Management's proposed acquisition, the initiative on what happens next lies with Apollo.

Click HERE to read more about what led to the Apollo deal and how it might end up.

Steven Davidoff, who blogs as the "Deal Professor" on the New York Times' Web site, wrote on Feb. 11 that the main driver of the proposed takeover is Apollo's willingness to raise its bid and whether a settlement could be reached that would allow the merger to go forward.

"There appears no indication for either of these events right now, but a month is a long time in the corporate arena," Davidoff wrote.

Apollo has offered to pay $11.50 per unit in a proposed $2.4 billion transaction that would allow it to acquire Cedar Fair, assuming about $1.6 billion of outstanding debt.

The merger must be approved by votes representing two-thirds of the company's outstanding units, and the critics of the proposed deal include Geoffrey Raynor, who controls the votes for about 18 percent of the units through companies such as Q Funding. Neuberger Berman, the second-largest unitholder, also has come out publicly against the deal.

Q Funding announced last week that it has sent out a letter to all Cedar Fair unitholders, urging them to vote against the transaction.

Davidoff, a University of Connecticut law professor and the author of a new book, "Gods at War: Shotgun Takeovers, Governments by Deal and the Private Equity Implosion," said in an interview this week that he sees three possible scenarios in the weeks ahead.

One is that Apollo does nothing and its original December proposal goes to a vote.

Another is that Apollo raises its offer above $11.50 per unit.

A third is that Apollo makes a better offer in conjunction with cutting a deal with Q Funding and its allied companies, Davidoff said.

If, for example, Q Funding bought shares when Cedar Fair went private, it would make more money available for Apollo to make a better offer, Davidoff said.

Davidoff emphasized that all of his comments are pure speculation and that Apollo has given no indication of what additional moves, if any, it might make.

Apollo has no comment, said Kelly Nugent, a spokeswoman for the company that represents Apollo's dealings with the press.

Davidoff also wrote in his blog that Feb. 12 was the deadline to nominate new members of the Cedar Fair board and said it would be interesting to see if Q Funding or Neuberger Berman put any names forward.

There was in fact no Feb. 12 deadline, said Stacy Frole, director of investor relations for Cedar Fair.

Feb. 13 was the original deadline, set in last year's proxy statement, for unitholder proposals to be submitted to the annual meeting, Frole said. If the merger goes through, there won't be an annual meeting, because Cedar Fair will no longer be a public company, she said.

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