Chuck E. Cheese's Parent CEC To Be Taken Private By Apollo In $1.3 Bln Deal

(RTTNews) - Chuck E. Cheese's parent CEC Entertainment, Inc. (CEC) agreed Thursday to be taken private by Apollo Global Management LLC (APO) for $54.00 per share in a deal valued at about $1.3 billion, including assumed debt. The deal has the unanimous approval of the CEC Board, which recommends its shareholders tender their shares in the offer.

The deal was reached with Apollo after the CEC Board of Directors conducted a thorough review of strategic alternatives in order to maximize shareholder value.

"We are pleased to have reached this agreement with Apollo, which maximizes value for all of our shareholders. This transaction represents the successful conclusion of our extensive review of strategic alternatives," CEC Executive Chairman Richard Frank said in a statement.

The offer price represents a 11.5 percent premium over CEC's closing share price of $48.43 on Wednesday, and a 24.6 percent premium over CEC's unaffected share price of $43.34 on January 7, the last trading day prior to media speculation over a possible deal.

"We are excited about this transaction with Apollo, as it recognizes the value of CEC's global brand, strong cash flows and growth prospects while providing our shareholders with an immediate and substantial premium," CEO President and CEO Michael Magusiak stated.

The companies noted that the deal will be implemented through a cash tender offer at $54.00 per share, but the closure is primarily conditioned upon the tendering of at least a majority of the CEC common shares in to the offer.

The terms of the deal also provide for CEC to solicit superior proposals from limited third parties until January 29, 2014. However, there can be no assurances that the process will result in a superior proposal.

Private equity firm Apollo Global, the fund controlled by billionaire Leon Black, hired Deutsche Bank to manage the acquisition.

Irving, Texas-based CEC is a family dining and entertainment provider and the place 'Where a Kid can be a Kid.' 'CEC and its franchisees operate a system of 577 Chuck E. Cheese's stores located in 47 states and 10 foreign countries or territories. Each Chuck E. Cheese's features musical and comic robotic entertainment, games, rides and play areas, as well as a variety of dining options including pizza, sandwiches, wings, appetizers, a salad bar and desserts.

APO closed Wednesday's regular trading session at $35.75, up $0.18 on a volume of 1.20 million shares, and CEC closed at $48.43, up $0.17 on a volume of 0.10 million shares.