Apollo to Buy Chuck E. Cheese Operator for $1.3 Billion

CEC Entertainment Inc. (CEC), operator of 577 Chuck E. Cheese restaurants, agreed to a takeover by an affiliate of Apollo Global Management LLC (APO) in a transaction valued at $1.3 billion, including debt.

Apollo will pay $54 a share in an all-cash deal, Irving, Texas-based CEC said today in a statement. That’s 25 percent more than the closing share price on Jan. 7, before media reports of the transaction, the companies said. The offer is also 36 percent more than the 12-month volume weighted average of the stock’s price as of Jan. 7, they said.

The deal, unanimously approved by CEC’s board, “recognizes the value of CEC’s global brand, strong cash flows and growth prospects while providing our shareholders with an immediate and substantial premium,” Chief Executive Officer Michael H. Magusiak said in the statement. “Apollo brings significant industry expertise and financial resources.”

CEC said on Oct. 31 that it plans to open as many as 15 company-owned stores in 2014, including three outlet relocations and one franchise acquisition, with capital spending projected at $70 million to $75 million. The company said in a separate statement today that the sale plan doesn’t prevent a superior proposal from another bidder.

To contact the reporter on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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