This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Apollo Ups Ante in Bidding War for Great Wolf Resorts

Stocks in this article: WOLF APO

Sachin Shah a strategist at Tullett Prebon, said on Thursday that to raise KSL's $7.25 a share offer, Apollo would need to increase its bid by at least 25 cents. Meanwhile, the current offer price is close to Shah's $8 to $8.60 a share fair value for Great Wolf Resorts. In a March research note, he said that Great Wolf Resorts' core operations, its net operating losses a tax benefit for a profitable acquirer , and its majority equity stake in Creative Kingdoms, are worth up to $8.60 a share.

Shares of Great Wolf Resorts were nearly 8% higher in early trading to $8, adding to over 150% year-to-date gains as a result of the bidding war.

Some large shareholders feel that the Wisconsin-based owner of 11 water park themed resorts may be worth far more than Apollo and KSL's offers. PWK Partners, a 4.2% shareholder, said in an April 3 letter that the company is worth $10 per share. The investment firm also noted that it didn't believe "selling the company to a private equity buyer is the best avenue to maximize shareholder value in the current environment."

Some of Great Wolf Resorts value comes in its ownership of some of its 11 resorts, which featuring indoor water parks and family-styled suite lodging and restaurants, in spite of the company's loss-making ways. The hotels chain is also an attractive target for a private equity buyer. Amid a sea of losses, the company has managed to generate roughly $20 million in free cash flow in recent years -- a key for private equity investors.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

In 2011, Great Wolf Resorts saw its annual loss narrow by roughly 50% to $25 million on rising sales and overall operating profits. Still, much of Great Wolf Resorts financial stress results from a debt burden that's over $500 million. While the company turned an operating profit in 2011, its near $50 million in annual interest expense drove overall losses.

Great Wolf Resorts' bidding drama also coincides with some new high stakes corporate battles, including the takeover campaign launched by European drugs giant GlaxoSmithKline (GSK) for Human Genome Sciences (HGSI), a failed hostile Roche bid for Illumina (ILMN) and Carl Icahn's first 2012 activist win.

For more on deal trends, see 5 deal ready stocks loved by hedge funds portfolios. See five stocks that could be trampled by a share overhang, for more on private equity backed IPO's.

Deutsche Bank will continue to advise Great Wolf Resorts, while Morgan Stanley, UBS, and Nomura have acted as financial advisers to Apollo's bid.

-- Written by Antoine Gara in New York

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs