Canada Journal – News of the World Articles and videos to bring you the biggest Canadian news stories from across the country every day
Chuck E. Cheese restaurant chain is being acquired by an Apollo Global Management affiliate for approximately $950 million.
The company, which has four locations in Orlando and 577 locations in total throughout 47 states and 10 foreign countries, agreed to the buyout Wednesday, reports the Associated Press.
From CNN Money:
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.
Agencies/Canadajournal
