NEW YORK (The Deal)--New York private equity firm Apollo Global Management(APO) - Get Report on Thursday agreed to take Chuck E. Cheese's operator CEC Entertainment (CEC) private for $1.3 billion, or $54 per share in cash, including debt.

The purchase price valued CEC's equity at around $948 million and represented an 11.5% premium over CEC's Wednesday's closing stock price of $48.43. The transaction completes a strategic review process for CEC, the target said, confirming reports that surfaced earlier this month that it hired Goldman Sachs(GS) - Get Report to run an auction process.

Irving, Texas-based CEC operates 577 Chuck E. Cheese's restaurants. The chain is known for its children's entertainment centers.

CEC said partnering with Apollo will give it an opportunity to expand even further. "Apollo brings significant industry expertise and financial resources and we look forward to working with them to further grow CEC domestically and internationally," said CEC CEO Michael Magusiak in a statement.

The deal agreement gives CEC a two-week go-shop period through Jan. 29. Sterne Agee Group analyst Lynne Collier valued the purchase price at around 7.4 times the target's $171.6 million in Ebitda and wrote in a Thursday morning research note that higher bids are possible.

The deal comes as private equity interest is picking up steam in the restaurant sector. In November, Apollo sold fast food operator CKE to Atlanta counterpart Roark Capital Group for around $1.7 billion. In October, Centre Partners Management acquired the Captain D's seafood chain from Sun Capital Partners for around $175 million.

Olive Garden operator Darden Restaurants(DRI) - Get Report hired Goldman Sachs in December to consider options for its Red Lobster chain, including a spinoff or sale. Industry sources said they expect Red Lobster to be sold to a private equity firm for below $2 billion.

CEC shares opened 12% higher, to $54.49, on Thursday morning, giving it a market capitalization of about $850 million.