Apollo Global Management LLC will buy CEC Entertainment Inc., the parent of Check E. Cheese’s stores for about $950 million.
Leon Black’s Apollo Global Management will pay $54 per share for CEC, representing a premium of 11.5% to the stock’s Wednesday closing.
Apollo Deal includes go-shop period
The global alternative asset manager, Apollo Global Management LLC said the deal would follow a review by CEC’s board of the company’s option. The deal is worth about $1.3 billion, including the assumption of debt.
CEC’s stock rose sharply last week after Reuters reported that CEC was exploring a potential sale to private equity, citing people familiar with the matter.
The deal includes a go-shop period that would facilitate CEC to solicit superior offers from other parties over the next two weeks.
CEC Entertainment Inc. separately approved a shareholder rights plan, also known as a ‘poison pill’ which is usually used to prevent an individual or group from taking a large stake in a company. CEC indicated the plan is designed to help the board oversee a ‘fair and orderly process to maximize shareholder value’ in connection with the sale.
CEC’s presence in 47 states
The family dining and entertainment center business CEC and its franchisees operate 567 entertainment-focused Chuck E. Cheese restaurants in 47 U.S. states. The restaurants offer musical and robotic entertainment, games, rides, play areas and food such as pizza and sandwiches.
According to Apollo Global, the proposed deal with CEC represents a premium of about 25% to CEC’s closing share price on January 7, when reports of a possible deal first emerged.
CEC’s first restaurant was in San Jose, Calif., in 1977. It was started by Nolan Bushnell, a founder of Atari, the video game company.
Goldman Sachs Group Inc (NYSE:GS) and the law firm of Weil, Gotshal & Manges are advising CEC. Deutsche Bank AG (NYSE:DB) (FRA:DBK), Morgan Stanley (NYSE:MS) and UBS AG (NYSE:UBS) are serving as financial advisors to Apollo, and together with Credit Suisse Group AG (NYSE:CS), provided debt financing commitments.
In November, Apollo Global Management LLC announced its third quarter results, beating analysts EPS estimates. Its shares have only been on the public market since 2011, but the firm’s excellent investment performance has buoyed the company’s value. Stock has grown in value by over 90% since 2013 began.