Chuck E. Cheese owner agrees to $950M buyout

12:34 PM, Jan 16, 2014   |    comments
Chuck E. Cheese logo (Photo: CEC Entertainment, Inc.)
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NEW YORK (AP) - The parent company of the Chuck. E. Cheese restaurant chain has agreed to be acquired by an Apollo Global Management affiliate for about $950 million.

Chuck E. Cheese restaurants are known for their games, rides and play areas for children. Robotic characters including the Chuck E. Cheese mouse and others provide musical entertainment. The restaurants offer a variety of food, such as pizza, sandwiches, appetizers, a salad bar and desserts.

Investment firm Apollo will pay $54 per share for CEC Entertainment Inc. That's a 12% premium to the company's Wednesday closing price of $48.43. The companies put the deal's value at about $1.3 billion, including debt.

CEC has approximately 17.6 million outstanding shares, according to FactSet.

Founded by Leon Black in 1990, Apollo buys troubled companies using borrowed money and tries to sell them for more, usually years later, in a transaction known as a leveraged buyout.

CEC may seek out superior proposals from limited third parties until Jan. 29. The company, which announced Thursday that it adopted a shareholder rights plan, had been reviewing its strategic options. A shareholder rights plan, also known as a "poison pill," is commonly used by businesses try to ward off hostile takeover attempts.

CEC said Thursday that its shareholder rights plan was implemented to help its board "in overseeing a fair and orderly process" and to maximize shareholder value during a sale of the company. CEC said its rights plan won't prevent or restrict any person from making a superior bid.

CEC and its franchisees run 577 Chuck. E. Cheese locations in 47 states and 10 foreign countries or territories.

Its board unanimously approved the transaction.

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