Apollo Ups Ante in Bidding War for Great Wolf Resorts

NEW YORK (TheStreet) -- After a lull, the stakes are rising in a bidding war between private equity firms KSL Capital Partners and Apollo Global Management (APO) for theme park and hotels operator Great Wolf Resorts (WOLF).

After meeting an earlier $7 bid by KSL, Apollo management reacted to a $7.25 rebuttal bid made earlier this week by KSL with its biggest raise yet on Friday -- a 60 cent increasing its offer to $7.85. The rising stakes in the private equity buyout of Great Wolf Resorts have its takeover price closing in on what frustrated shareholders and analysts target as the company's fair value.

The increased bid from Apollo comes after one shareholder called for Apollo and KSL to raise the stakes in their Great Wolf Resorts fight.

A sale process that began with a $5 per share bid by Apollo and accepted by Great Wolf Resorts in March has proven dramatic for the emergence of a competing bidder in KSL. While management has sided repeatedly with Apollo bids at $5, $6.75 and most recently $7, KSL has raised the private equity giants bid each time. With a $7.85 bid on Friday morning, Apollo appears to be in it for the win, while KSL lingers.

At issue throughout the takeover, beginning with Great Wolf's board approval of a $5 offer by Apollo on March 12, has been whether offers reflect a fair value. Meanwhile, Great Wolf Resorts has accepted multiple Apollo bids without fully engaging KSL, even as offer prices stalled at $7. But after Apollo raised its offer to $7.85, Great Wolf Resorts epic sale process and KSL's role as a rival seems to be tilting in shareholders favor.

Another mystery is why a public blow-for-blow bidding war emerged after Great Wolf Resorts conducted what it told Bloomberg News was a nine-month auction process that only netted bids in the $5 range.

Apollo's offer represents a 87% premium to Great Wolf Resorts closing share price prior to announcing its acceptance of an initial $5 offer. The 60-cent bid increase to $7.85 also is in line with some analyst expectations and brings the loss-making company near its fair valuation.

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