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The
Irving, Texas-based company, known for its arcade games and rat
mascot Charles Entertainment "Chuck E." Cheese, is working with
investment bank Goldman Sachs on an auction process that could
attract private equity firms as well as peers such as Dave &
Busters Entertainment, the sources said.
CEC Entertainment, the parent company of Chuck E. Cheese, has
told potential acquirers it expects to generate around 1.2
billion in revenue and $195 million in earnings before interest,
taxes, depreciation and amortization (EBITDA) this year, the
sources added. Based on the valuation metrics of its peers, the
company could fetch well over $1 billion in a sale, according to
the sources.
The sources cautioned that no deal is certain and asked not to
be identified because the matter is confidential. Goldman Sachs
declined to comment. CEC Entertainment and Dave & Busters did
not immediately respond to requests for comment.
Private equity firm Apollo Global Management Inc acquired Chuck
E. Cheese in 2014 for $1.3 billion, including debt. The company
filed for bankruptcy in June 2020 after the onset of the
COVID-19 pandemic weighed on its business.
Chuck E. Cheese emerged from bankruptcy in December 2020 after
ownership was passed to its creditors, including investment
firms Monarch Alternative Capital and Redan Advisors, who agreed
to eliminate $705 million in debt from its balance sheet.
The company and its franchisees operate nearly 600 Chuck E.
Cheese locations and over 120 Peter Piper Pizza locations
globally. It also owns virtual kitchen concept Pasqually's Pizza
& Wings.
(Reporting by Abigail Summerville in New York; Editing by Daniel
Wallis)
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