http://dealbook.blogs.nytimes.com/2010/03/22/the-price-of-goofs-in-deal-making/

This is a most embarrassing public repudiation of Cedar Fair actions by a respected journalist and expert on mergers.

Note the professors comments in reference to Q Investments statement about not being cut out of the upside of the deal. The professor notes, correctly, Q Investments language suggests they may go along with the merger if they are cut into the equity of the new company.

This action would really take the retail investors to the cleaners. Everyone would win, except the large number of individual investors. This action, should it occur, would resemble, in my mind, Greenmail.

Greenmail is an illegal activity. It is when one large investor gets preferential treatment, usually a higher price for their shares, than other shareholders. Giving a party selective access to the upside of the deal whilst depriving other parties that opportunity is suspect.

And this is the heart of the problem with the sweetheart deal Cedar Fair Management and Board have hammered out in the proposed merger with Apollo: management and the board get to participate in the upside of the deal without suffering any downside.

They are shifting all the downside risk (read “costs”) to the Unitholders while feathering their nests with all the upside potential and thus avoiding downside costs.

It is a case of “heads I win, tails you loose.”