CEC Entertainment Agrees to Buyout - Analyst Blog

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Family dining chain, CEC Entertainment, Inc. ( CEC ) recently entered into an agreement as per which an affiliate of Apollo Global Management (APO), a leading global alternative investment manager, will take over the company for $1.3 billion, including debt. The cash tender offer of $54.00 per share represents a 25.0% premium over the company's closing share price as of Jan 7, 2014.

Per media reports, CEC Entertainment that runs the Chuck E. Cheese chain was looking for a buyer. This company offering food and games has been struggling of late due to the challenging environment.  In fact, third quarter revenue (reported in November) declined 0.4% year over year due to a 3.6% drop in food and beverage sales. Comps declined 2.1% hurt by an 11% decrease in birthday party sales.

Due to the weak results, the board of directors of CEC Entertainment was looking for a suitable offer and approved the deal after reviewing a number of strategic alternatives. It also adopted a shareholder rights plan as per which it declared a dividend of one preferred stock purchase right on each outstanding share of common stock as of Jan 26, 2014.

The merger will enable CEC Entertainment to expand domestically as well as internationally and provide a substantial premium to its shareholders.

CEC Entertainment presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Fiesta Restaurant Group, Inc. ( FRGI ), Jack in the Box Inc. ( JACK ) and Buffalo Wild Wings Inc. ( BWLD ). While Fiesta Restaurant and Jack in the Box carry a Zacks Rank #1 (Strong Buy), Buffalo Wild Wings holds a Zacks Rank #2 (Buy).



BUFFALO WLD WNG (BWLD): Free Stock Analysis Report

CEC ENTERTANMNT (CEC): Free Stock Analysis Report

FIESTA RESTRNT (FRGI): Free Stock Analysis Report

JACK IN THE BOX (JACK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: APO , BWLD , CEC , FRGI , JACK

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