Six Flags Entertainment Corporation

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Ademi LLP is investigating Six Flags (NYSE: SIX) for possible breaches of fiduciary duty and other violations of law in its transaction with Cedar Fair.

In the transaction, Six Flags stockholders are expected to receive only 0.5800 (the “Six Flags Exchange Ratio”) shares of common stock in the new combined company for each share owned. Cedar Fair unitholders will own approximately 51.2%, and Six Flags shareholders will own approximately 48.8%, of the combined company. One business day prior to the close of the transaction, Six Flags will declare a special cash dividend composed of: (i) a fixed amount of $1.00 per outstanding Six Flags share, totaling approximately $85 million in the aggregate, plus, (ii) an amount per outstanding Six Flags share equal to (a) the aggregate per unit distributions declared or paid by Cedar Fair to unitholders with a record date following today’s date and prior to the close of the transaction, multiplied by (b) the Six Flags Exchange Ratio, which special dividend will be payable to Six Flags shareholders of record as of one business day prior to the close of the transaction, contingent on the closing of the transaction. 

The transaction agreement unreasonably limits competing transactions for Six Flags by imposing a significant penalty if Six Flags accepts a competing bid. Six Flags insiders will receive substantial benefits as part of change of control arrangements.