Children’s pizza place Chuck E. Cheese (CEC) has been bought by private equity firm Apollo Global Management for $1.3 billion in value.
CEC stock is up 12% pre-market today on the news that will make Chuck E. Cheese private.
Apollo Global will buy the company for $54 a share.
Apollo is paying an 11.5% premium from Wednesday’s CEC stock close and 25% above the closing price on Jan. 7. That was the day before media speculation about a purchase started driving up CEC share prices.
CEC has reported a drop in revenue in five of the last seven quarters. But shares of stock were up 33% last year, helped by a 13% increase in the dividend announced in October.
All the same, CEC has faced a number of challenges with revenue declines that the Apollo Group is capitalizing on.
Some may remember Apollo as one of the buyers of Hostess Brands last year.
Apollo in fact buys troubled companies to turn them around, in what many know as a leveraged buyout.
USA Today reported that 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 stock is up 9% year to date.
