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CEC Entertainment Inc., the parent company of Chuck E. Cheese's and Peter Piper Pizza brands, has agreed to merge with Leo Holdings Corp., a specially created "front company" founded by the company's management. British private equity firm Lion Capital, with the intention of making public again later this year, companies announced Monday.
The transaction is expected to close in the second quarter. Apollo Capital Management LLC, owner of CEC, which acquired the private group of Chuck E. Cheese and bought Peter Piper Pizza in separate transactions in 2014, will retain a 51% stake in Leo Holdings named after Chuck E. Cheese Brands Inc. and offers shares on the New York Stock Exchange.
The companies said that the merger of the parent company CEC, Queso Holdings and Leo Holdings, had a business value of $ 1.4 billion. The CEC of 750 units, which includes reported sales of $ 896 million for fiscal 2018. The boards of Queso and Leo have approved the proposed agreement and Leo's shareholders will vote on the plan.
"The CEC has demonstrated its resilience," said Lea Lyndon, president and chief executive officer of Leo Holdings and founder of Lion Capital, during a webcast Monday. "It's been around 42 years. … it's a very defensive game with very attractive cash features. "
Lion Capital, which raised $ 200 million in February 2018 for Leo Holdings SPAC, has invested in restaurant brands such as Round Table Pizza, Marble Slab Creamery, Great American Cookies, Gordon Ramsay Restaurants and Wagamama.
Apollo's investments include restaurant brands such as Qdoba, CKE Restaurants and Sprouts Farmers Market.
At the end of the merger, Lyndon announced that he and Andy Jhawar, senior partner at Apollo and head of his consumer and retail group, would be the co-chairmen of Chuck E. Cheese and Tom Leverton, CEO of CEC Years.
Leverton, Monday, announced that the company plans to increase the number of visits per year and increase its spending via the "All You Can Play" platform. He added that the company was also working to increase average unit volumes beyond the current $ 1.6 million with a 12% increase in revenue (about $ 1.8 million) by extending the ongoing renovation program, launched in 2017, and adding 25 additional restaurants in 2018. CEC plans to reimage approximately 60 more locations this year.
The CEC is also planning to expand its international development, which includes 109 units abroad. "Our first site in India will open in 2019 or early 2020," said Leverton, "offering us a great gateway to Asia."
The CEC announced a preliminary increase in same-store sales of 7.7% in the first quarter, after increasing 3.3% in the fourth quarter and 2.2% in the third quarter of 2018.
CEC has 606 Chuck E. Cheese units in 47 states and 14 countries. The company has 144 Peter Piper Pizza units in six states and Mexico.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless
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