Chuck E. Cheese, the popular US restaurant chain that came out from bankruptcy three years ago, is reportedly considering a sale amid acquisition interest.
Potential Acquisition of Chuck E. Cheese?
People familiar with the matter told Reuters that the company, known for its arcade games and rat mascot Charles Entertainment "Chuck E." Cheese, is collaborating with investment bank Goldman Sachs to navigate a potential auction process that could attract private equity firms and peers like Dave & Busters Entertainment.
The sources said that CEC Entertainment, the restaurant's parent company, has relayed to potential buyers an expected revenue of approximately $1.2 billion and a foreseen $195 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the current fiscal year.
According to the insiders, there is speculation that, based on the valuation benchmarks of similar companies, the selling price could surpass the $1 billion mark. However, the sources noted that these are all talks, and no deal is certain at the moment. The insiders have underscored the confidential nature of these discussions.
Goldman Sachs, the investment bank facilitating Chuck E. Cheese in this process, has reportedly opted not to comment on the matter. CEC Entertainment and Dave & Busters have also yet to comment on this report.
Chuck E. Cheese Emerges From Bankruptcy
In 2014, Chuck E. Cheese underwent a significant transformation when the private equity firm Apollo Global Management Inc. acquired the company for $1.3 billion, including debts.
However, the restaurant chain encountered financial hurdles and filed for bankruptcy in June 2020, attributing it to the adverse impacts of the COVID-19 pandemic on its operational finances.
In December 2020, Chuck E. Cheese eventually navigated its way out of bankruptcy, marking a shift in ownership to its creditors, among them are investment firms Monarch Alternative Capital and Redan Advisors.
These financial stakeholders played a pivotal role in rejuvenating Chuck E. Cheese, demonstrating their commitment by approving the elimination of a significant $705 million in debt from the company's balance sheet.
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