Chuck E. Cheese to Trade on New York Stock Exchange Following $1.4B Merger

IRVING, TEXAS — Following a merger with the parent company of the Chuck E. Cheese brand, London-based Leo Holdings Corp. plans to rebrand itself and take the new company public on the New York Stock Exchange (NYSE) under the ticker symbol “CEC.” The enterprise value of the combined company, which will be known as Chuck E. Cheese Brands Inc., is estimated at $1.4 billion.

Leo Holdings, which is self-described as a special purpose acquisition firm, has entered into a “definitive business combination agreement” with Queso Holdings Corp., which is the parent company of CEC Entertainment Inc., the owner, operator and leading franchisor of the family dining and entertainment brand Chuck E. Cheese.

The other principal in the merger agreement is Queso’s controlling stockholder, an entity owned by funds managed by affiliates of Apollo Global Management LLC (NYSE: APO), a publicly traded equity firm based in New York.

CEC Entertainment is based in the Dallas suburb of Irving and also owns, operates and franchises Peter Piper Pizza, a family dining concept.

As of year-end 2018, CEC Entertainment and its franchisees operated a system of 606 Chuck E. Cheese venues and 144 Peter Piper Pizza restaurants, with locations in 47 states and 14 foreign countries and territories. Nolan Bushnell, the founder of gaming console system Atari, opened the first Chuck E. Cheese location in Silicon Valley in 1977.

According to CEC Entertainment, the venue revenue mix among the 750 locations is 55 percent entertainment and merchandise and 45 percent food and beverage.

Pursuant to the merger agreement, Leo Holdings will acquire Queso Holdings and keep the leadership team of CEC Entertainment intact. After the close of the transaction, outside investors will purchase $100 million of common stock of Chuck E. Cheese Brands Inc. in a private placement. The new investment and the balance of the approximately $200 million in cash held in Leo’s existing trust account will be used to pay transaction expenses and deleverage the CEC Entertainment’s existing capital structure.

Existing shareholders including funds managed by majority shareholder Apollo expect to hold an approximately 51 percent stake in Chuck E. Cheese Brands Inc. upon completion of the transaction.

Citigroup Global Markets Inc. acted as financial advisor, capital markets advisor and private placement agent to Leo Holdings. Jefferies LLC acted as financial advisor and capital markets advisor to CEC Entertainment.

Kirkland & Ellis LLP acted as legal counsel to Leo, and Morgan, Lewis & Bockius LLP acted as legal counsel to CEC Entertainment.

The boards of directors of both Leo and Queso have unanimously approved the proposed transaction. The parties expect that the transaction will close in the second quarter of this year.

— John Nelson

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