A Chuck E. Cheese buyout has kids who enjoy the popular restaurant and games chain listening this week, as a parent of the company has made a $950M deal to be formally acquired by an Apollo Global Management affiliate. The massive agreement comes at a time when the Chuck E. Cheese franchise has been fading from public usage and struggling to succeed in terms of sales. Yahoo News provides the details on this story this Thursday, Jan. 16, 2014.
The Chuck E. Cheese buyout arrives over 30 years since the creation of Chuck E. Cheese restaurants back in 1997. The chain is well-known for its clever combination of robotic figures that offer entertainment and musical fun, play areas, and fun and games. However, they have faced hard times in recent years, despite a 2012 makeover of the Chuck E. Cheese mouse to appear more modern.
An investment firm cited as Apollo Global Management has since bought the chain out for a cool $950M. The deal itself is a transaction often called a leveraged buyout, in which investors purchase struggling companies with borrowed money from a variety of sources and then attempt to sell them in the future for a profit.
According to the official press release on the Chuck E. Cheese buyout:
“The companies have confirmed that Apollo will pay $54 per share for CEC Entertainment Inc. In total, that's about a 25 percent premium over CEC's closing price as of this Jan. 2014, the last trading day before media speculation regarding a transaction, the companies noted. They put the deal's value at about $1.3 billion, including all contained debt. CEC, Inc. has approximately 17.6 million outstanding shares at this time, according to tracking site FactSet.”
Chuck E. Cheese has also recently announced that its initial shareholder rights plan was first created to help the board "in overseeing a fair and orderly process," as well as to benefit shareholder value at its maximal level in light of a future company sale. The company added that its rights plan will not prevent any individuals from making a superior bid.
This week, the CEC board unanimously approved the leveraged buyout transaction of the classic restaurant and games chain.