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
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.