Cedar Fair agrees to go private; XTO buyout appears firm; Fox owner expected to seek deals

By Cristal Cody

Tupelo, Miss., Dec. 17 - The market was unfazed by Exxon Mobil Corp.'s legislative merger requirements to complete the $31 billion stock takeover of XTO Energy Inc., an analyst told Prospect News on Thursday.

In other situations, the year has been a tough one for amusement park companies. Knotts Berry Farms operator Cedar Fair, LP said it will be taken private by asset management firm Apollo Global Management for $11.50 a unit in cash.

Also on Thursday, an analyst expects News Corp., home of Fox Broadcasting Co., to make some deals in the year ahead.

Meanwhile, investors sent stocks down.

The Dow Jones Industrial Average lost 132.86 points, or 1.27%, to close at 10,308.26.

The Standard & Poor's 500 index fell 13.10 points, or 1.18%, to 1,096.08.

The Nasdaq Composite index dropped 26.86 points, or 1.22%, to end trading at 2,180.05.

Exxon imposes deal terms

According to the agreement to acquire XTO, Exxon can abandon the acquisition if legislation is passed to prevent a drilling technique for oil and natural gas.

If hydraulic fracturing, a regulated technique used to tap oil and natural gas from rock formations, including shale beds, is made illegal, the deal will be terminated.

Exxon said Monday it will acquire XTO for 0.7098 of a share of Exxon stock for each share of XTO and said the acquisition will boost its position in the development of unconventional natural gas and oil resources.

The total deal is valued at $41 billion, which includes $10 billion in existing XTO debt.

Jason Gammel, an analyst with Macquarie Research Equities, told Prospect News on Thursday that it's unlikely legislation will squash the deal.

"I wouldn't expect that would happen before closing," he said.

The deal "seems pretty firm," Gammel said.

The transaction is expected to close in the second quarter and is subject to approval by XTO investors and regulatory clearances.

Few, if any, regulatory issues are expected, said Jim Byrne, an analyst with BMO Capital Markets Corp.

"There's not really an overlap in terms of assets or anything, so I can't imagine any concerns about competition," he said.

Fort Worth-based XTO is a domestic oil and natural gas producer in the United States.

Irving, Texas-based Exxon is the largest publicly traded international oil and gas company.

XTO shares closed down 30 cents, or 0.64%, at $46.70.

Exxon shares fell 21 cents, or 0.31%, to $68.22.

FUN no more

The buyout offer for Cedar Fair represents a premium of 28% over the regional amusement and water park company's closing unit price on Tuesday.

Units of the company jumped $2.12, or 23.35%, to $11.20 on Thursday. The units have traded from $5.75 to $14.10 over the past year.

The total deal is valued at $2.4 billion and includes the refinancing of Cedar Fair's outstanding debt.

"We have considered a wide range of strategic alternatives over the past several years," Cedar Fair's chairman, president and chief executive officer, Dick Kinzel, said in a statement. "After considering these strategic alternatives, we have concluded that the transaction with Apollo is in the best interest of our unitholders."

The merger is conditioned on regulatory clearances and approval of holders of two-thirds of Cedar Fair's outstanding units. The transaction is expected to close by the beginning of the second quarter.

Under the terms of the merger agreement, Cedar Fair may solicit alternative proposals for 40 days.

Cedar Fair representatives did not return a call for comment.

Sandusky, Ohio-based Cedar Fair owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels in the United States and Canada.

Deal action in year ahead

News Corp., which controls a vast array of film, publishing and cable operations, including Twentieth Century Fox Film, is expected to consider some deals, Richard Greenfield, an analyst with Pali Capital Inc., said Thursday.

"With a strong balance sheet and no interest in share repurchase, we continue to believe News Corp. is interested in pursuing strategic acquisitions, including expanding their distribution network, such as buying in BSkyB," Greenfield said in a research note.

British Sky Broadcasting Group plc is a leading television service provider in the United Kingdom and Ireland.

Shares of New York-based News Corp. slipped 13 cents, or 0.97%, to $13.22.

U.S.-listed shares of British Sky fell 60 cents, or 1.62%, to $36.39.

Mentioned in this article:

British Sky Broadcasting Group plc NYSE: BSY

Cedar Fair, LP NYSE: FUN

Exxon Mobil Corp. NYSE: XOM

News Corp. Nasdaq: NWSA

XTO Energy Inc. NYSE: XTO

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