A sign is posted on the outside of a Chuck E. Cheese restaurant on June 25, 2020 in Pinole, California.
Justin Sullivan | Getty Images
Chuck E. Cheese, the U.S. restaurant chain that emerged from bankruptcy three years ago, is exploring a sale due to takeover interest, according to people familiar with the matter.
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 includes both private equity firms and competitors such as Dave & Busters Entertainment could attract, the sources said.
CEC Entertainment, the parent company of Chuck E. Cheese, has told potential buyers that it will have revenue of around $1.2 billion this year and earnings before interest, taxes, depreciation and amortization (EBITDA) of $195 million -dollars expected, the sources added. Based on its competitors' valuation metrics, 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 named 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 acquired Chuck E. Cheese in 2014 for $1.3 billion, including debt. The company filed for bankruptcy in June 2020 after the COVID-19 pandemic outbreak impacted its business.
Chuck E. Cheese emerged from bankruptcy in December 2020 after ownership was transferred to its creditors, including investment firms Monarch Alternative Capital and Redan Advisors, which agreed to remove $705 million in debt from its balance sheet cancel.
The Company and its franchisees operate nearly 600 Chuck E. Cheese locations and over 120 Peter Piper Pizza locations worldwide. It also owns the virtual kitchen concept Pasqually's Pizza & Wings.