Private equity firm Apollo Global Management has agreed to purchase the Chuck E. Cheese's restaurant chain for $1.3 billion in cash and assumed debt, Apollo said in a news release.
An affiliate of Apollo will pay $54 a share to acquire the pizza chain's parent company, CEC Entertainment Inc. The per-share price is 11.5% above CEC's closing price Wednesday -- and about 25% its close on Jan. 7, the day before reports surfaced that the company was preparing to be sold.
"We are pleased to have reached this agreement with Apollo, which maximizes value for all of our shareholders," CEC Executive Chairman Richard M. Frank said in a statement. "This transaction represents the successful conclusion of our extensive review of strategic alternatives."
Founded in 1977, the Chuck E. Cheese's chain operates family-oriented restaurants that feature arcade games, costumed characters and birthday parties. The company has struggled in recent years, with sales declining in seven of the past nine quarters. Most recently, CEC reported that sales in the third quarter of fiscal 2013 were down 0.3% from the same period a year earlier.
Apollo, operated by billionaire Leon Black, had about $113 billion under management in September. The firm's holdings include gaming company Caesars Entertainment Corp., Norwegian Cruise Lines and Realogy Holdings Corp., owners of Coldwell Banker and Century 21 real estate companies.
Apollo has experience with restaurants as well. It previously owned Carl's Jr. parent CKE Inc., which it sold in November to Roark Capital Group. Apollo partner Scott Ross said the Chuck E. Cheese's acquisition gives the firm "the opportunity to partner with the proven leader in family dining and entertainment."
“Across the U.S., and increasingly around the world, the Chuck E. Cheese’s brand represents quality, safe and fun family entertainment," Ross said.
CEC and its franchisees operate 577 Chuck E. Cheese's stores in 47 states and 10 foreign countries or territories.
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