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Two of the nation's largest entertainment-retail operators have reached a deal to become one, drawing on resurgent incomes to expand in a post-vaccine climate.
Dave & Buster's Entertainment Inc., which operates 145 locations, is in the final stages of a deal to buy the Main Event brand from Ardent Leisure Group and RedBird Capital Partners for $835M in an all-cash deal, the companies announced Wednesday.
The two brands would continue to operate as distinct entities once the deal closes later this year, the announcement said. Chris Morris, currently the CEO of Main Event, would become CEO of the combined company.
"We are thrilled to join the Dave & Buster's family," Morris said in a statement. "We will undoubtedly benefit from the collective expertise and strong culture of both brands, particularly as we continue to accelerate Main Event's aggressive expansion plans."
Dallas-based Main Event has expanded its footprint by 30% since Morris took over the brand in 2018, according to the announcement. During the pandemic, the brand opened its 50 locations with limited capacity, contactless payment options and other social distancing and cleaning measures to try to keep guests safe.
Publicly traded Dave & Buster's has largely recovered after the brand briefly mulled bankruptcy during the depths of the pandemic in 2020. Its stock has returned to pre-pandemic levels, but it dropped Wednesday after the announcement of the deal. As of 12:30 p.m. ET, the company's stock was down 9% from the day's opening bell.
On Dave & Buster's' Q4 earnings call, interim CEO Kevin Sheehan said the brand's net income exceeded pre-pandemic levels, though its overall revenue hadn't quite recovered. Sheehan also said the brand planned to open eight new stores in 2022, each around 25K SF.
Sheehan, who has served as CEO since October, would return to his prior role as board chair once the deal is complete.
"There is meaningful upside potential for this company, and we are laser-focused on driving that to reality," Sheehan said on the March 29 call. "Tighten your seat belts as we are on the move."
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