Acquisition of CEC Entertainment by Apollo Global Management, LLC May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the acquisition of CEC Entertainment (NYSE: CEC) by an affiliate of Apollo Global Management, LLC. (NYSE: APO). On January 16, 2014, the companies announced the signing of a definitive agreement pursuant to which Apollo will commence a tender offer to acquire all outstanding shares of CEC for $54.00 per share in cash.
Is the Proposed Merger Best for CEC and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at CEC is undertaking a fair process to obtain maximum value and adequately compensate CEC shareholders in the merger.
As an initial matter, the $54.00 consideration represents a one week premium of 24.6% based on CEC’s closing price on January 7, 2014. This premium is substantially below the average one week premium of over 33% for comparable transactions in the last three years.
Further, On October 31, 2013, CEC released the company’s financial results for the period ended September 29, 2013, reporting increases in total revenue and net income for the first nine months of 2013. Specifically, CEC reported an increase in total revenue of $17.5 million to $643.2 million, compared to the same period in 2012. The company also increased net income by 8.4%, or $3.7 million, to $47.9 million, compared to the same period in 2012. In addition, CEC reported diluted earnings per share of $2.78 per share for the nine months ended September 29, 2013, as compared to $2.50 in 2012.
Given these facts, Robbins Arroyo LLP is examining whether the CEC board of directors are seeking to benefit themselves with their decision to sell the company to Apollo now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
CEC shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
CEC shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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