Why CEC Entertainment, Inc. Shares Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of CEC Entertainment, Inc.  jumped 12% today after an affiliate of Apollo Global Management, LLC agreed to acquire the Chuck E. Cheese restaurant operator for about $950 million.

So what: The all-cash deal values CEC at $54 per share and represents a premium of 12% to its closing price on Wednesday. CEC management had been looking into its strategic options amid sluggish sales growth lately, so today's news naturally removes a big cloud of uncertainty over the stock.

Now what: While CEC has until Jan. 29 to seek out superior bids, both sides seem confident that the deal will go through. "This transaction with CEC gives us the opportunity to partner with the proven leader in family dining and entertainment," said Scott Ross, Partner at Apollo Global Management. "Across the U.S., and increasingly around the world, the Chuck E. Cheese's brand represents quality, safe and fun family entertainment." So although CEC's upside is likely limited at this point, Apollo's newly bolstered portfolio with be worth checking out.

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The article Why CEC Entertainment, Inc. Shares Popped originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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