Apollo Global Management (APO) agreed to buy Chuck E. Cheese's parent CEC Entertainment (CEC) on Thursday for $1.3 billion in cash.

The New York-based private equity firm will pay $54 a share for the child entertainment chain, representing a premium of roughly 25% over CEC’s closing price on Jan. 7, the last trading day before speculation of a deal was first reported.

Shares of CEC were up more than 12.6% to $54.55 in recent trade. Those of Apollo were off about .0.8% to $35.45.

The CEC board, which unanimously approved the transaction, said it decided on the deal after reviewing a number of other strategic alternatives to try and maximize shareholder value. It remains subject to majority shareholder and regulatory approvals. 

“We are excited about this transaction with Apollo, as it recognizes the value of CEC’s global brand, strong cash flows and growth prospects while providing our shareholders with an immediate and substantial premium," CEC chief executive Michael Magusiak said in a statement.

Apollo will help expand the Chuck E. Cheese’s brand domestically and overseas from the 577 it operates around the world currently. The private equity firm will also acquire the restaurant’s assets, talent and franchise partners.

Goldman Sachs (GS) is serving as financial advisor to CEC, while Apollo has retained Deutsche Bank Securities (DB), Morgan Stanley (MS) and UBS (UBS) as financial advisors.  

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