Minnesota resident may have heard that the private equity firm Onex Corp. and entertainment company Cineplex Inc. might be joining forces to become the leading contenders to purchase arcade and restaurant chain, Dave & Buster’s. The sales price is reportedly over $1 billion. Oak Hill Capital Partners currently owns the chain.
If Onex and Cineplex are successful in this business expansion, they would reportedly prevail over the offer made by Apollo Global Management.
Discussions are ongoing with this team of purchasers. Dave & Buster’s is also speaking to other potential buyers. It may seek an initial public offering if the sale does not go through. The chain, however, previously cancelled a planned IPO because of market conditions in October 2012.
Dave & Buster’s is a 32 year-old-chain which was founded by owners of a neighboring bar and arcade. It operates 66 venues throughout the United States and Canada. The chain reported third quarter 2013 earnings of $19.8 million before interest, taxes, depreciation and amortization. It targets patrons who are 21 to 39-years-old and provides access to video and interactive games and to more traditional games such as shuffleboard and billiards.
Oak Hill purchased the chain for approximately $570 million from Wellspring Capital Management LLC in 2010. Wellspring took the restaurant chain private in a transaction valuing the company at $375 million in 2005.
Onex and Cineplex had earlier dealings. Onex achieved control over Cineplex’s predecessor firm, Loews Cineplex Entertainment Corp. by partly converting debt to equity. Onex sold its stake in Cineplex in 2009.
Business mergers & acquisitions and buyouts, such as this planned acquisition, are complex and can change competition in enterprises such as the hospitality business in Minnesota. Regulatory compliance and financing are only two of the hurdles that must be surmounted.
Source: Wall Street Journal, “Onex, Cineplex team in lead to buy Dave & Buster’s,” Gillian Tan and Mike Spector, April 14, 2014