The restaurant chain Chuck E. Cheese is for sale. The restaurant chain is known to kids as the place to go for parties, games, rides and playtime. For parents, it’s a one stop temporary relief from boredom or a solution to the problem of where to have a little one’s birthday party. In addition to the aforementioned activities, the restaurant chain Chuck E. Cheese has the “Chuck E. Cheese” large musical mouse providing entertainment, while the tables are filled with kids and birthday cakes. Food is available, like pizza, sandwiches and even a salad bar.
Apollo Global will pay $950 million for the children’s play place. The investment firm will provide $54 per share, 12 percent above the price at closing on Wednesday of $48.43. The owner of Chuck E. Cheese has agreed to $950 million with the total deal at $1.3 billion when the existing approximately $370 million in debt is included. Leon Black, the founder of Apollo, does this sort of thing, purchasing companies with borrowed cash and years later selling them above the purchase price. This type of transaction between companies is called a leveraged buyout.
Restaurant chain, Chuck E. Cheese, may look for better money proposals up until the end of the month and to avoid any hostile takeovers it’s using its shareholders in the “poison pill” plan. The “poison pill” plan has been implemented to maximize fairness for the shareholders, so that they will get a reasonable deal.
There are 577 Chuck E. Cheese restaurants in 47 U.S. states and approximately 10 foreign countries, with a few of those being provinces.
The very first Chuck E. Cheese restaurant opened in 1977 in San Jose, California. It was started by Nolan Bushnell, founder of the video gaming company Atari. A surprising little known fact about the founder is that he was also Steve Jobs boss at one time. Mr. Bushnell was offered a 30% investment take for 50K in his start-up named Apple by Steve Jobs himself.
Acting as advisor to Chuck E. Cheese is Goldman Sachs, while Deutsche Bank, Morgan Stanley and UBS will provide financial advice to Apollo. In addition Credit Suisse gives debt counseling and commitments to Chuck E. Cheese. The law firm of Weil, Gotshal & Manges will advise Chuck E. Cheese and Wachtell, Rosen & Katz, Parel, Weiss, Rifkind, Lipton, Wharton & Garrison are to provide Apollo Management, a private equity firm, with legal counsel.
Stock prices for Chuck E. Cheese saw a quick rise last week, when it became known that the company was seeking such a sale. They have two weeks now to shop around. A possible reason for this sale of Chuck E. Cheese is slower cash intake in recent years from competition in the children’s market and entertainment sector. Additionally, job losses and the economy most likely play into consideration for people’s choices in how they spend their money. Now the market is up, the highest of all time, and there is job growth in America. This may make for a lively spring and summer for family spending.
Chuck E. Cheese, “Where a kid can be a kid,” was a beginner in the industry of video games in arcade settings and is now for sale.
By Kim Troike