NEW YORK (AP) — The parent company of the Chuck. E. Cheese restaurant chain has agreed to be acquired by an affiliate of Apollo Global Management for about $950 million.
Founded in 1977, Chuck E. Cheese restaurants are known for their mix of games, play areas and robotic characters that provide musical entertainment. The chain has been struggling to lift sales, even after a makeover for its rodent mascot in 2012 that was intended to refresh its outdated image.
Enter Leon Black's investment firm Apollo, which buys troubled companies using borrowed money and tries to sell them for more, usually years later, in a transaction known as a leveraged buyout.
The companies say Apollo will pay $54 per share for CEC Entertainment Inc. That's about a 25 percent premium over CEC's closing price on Jan. 7, 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 debt.
CEC has approximately 17.6 million outstanding shares, according to FactSet.
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 to try to ward off hostile takeover attempts.
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