Oak Hill to pay $570m for Dave & Buster’s

Oak Hill will buy the casual dining and arcade game chain from Wellspring Capital. Dave & Buster’s abandoned plans for a $170m IPO in mid-2008.

Oak Hill Capital Partners has agreed to acquire restaurant chain Dave & Buster’s from Wellspring Capital Management for $570 million.

Oak Hill will invest alongside Dave & Buster’s management, led by current chief executive Steve King.

The Dallas, Texas-based chain operates 56 locations in the US and Canada. The restaurant serves higher-end pub fare, but is best known for its games, with attractions such as billiards and shuffleboard providing a game-room atmosphere.

The deal is expected in the second quarter of 2010. 

The capital structure of the deal was not disclosed, but The Wall Street Journal reported that the equity portion of the deal comes to $240 million. Oak Hill said the deal has fully committed financing, consisting of debt financing to be provided by JPMorgan Chase Bank and Jefferies & Company. JP Morgan Securities will act along with Jefferies & Company as the joint lead arranger and bookrunner for the debt.

Wellspring took Dave & Buster’s private for $375 million in 2006. The deal was valued at $18.05 a share, representing an almost 19 percent premium to the company’s stock price prior to the deal’s announcement.

Bahrain-based Investcorp had previously tried to take Dave & Buster’s private in 2002, but ultimately walked away from the deal amid shareholder dissent.

In July 2008, Wellspring registered the company for a $170 million IPO on the NASDAQ stock exchange, but the firm never set a date for the listing.

The IPO filing said the offering’s net proceeds would be used to repay roughly $75 million in debt, as well as related premiums, interest and expenses. At the time, Wellspring controlled 82 percent of Dave & Buster’s, while Dallas-based hedge fund manager HBK owned 18 percent.