KSL raises Great Wolf bid, challenging Apollo

NEW YORK (Reuters) - Private equity firm KSL Corp raised its bid for Great Wolf Resorts Inc WOLF.O by 12 percent to $234 million as it works to top rival buyout group Apollo Global Management (APO.N) in their battle to acquire North America's largest operator of indoor water parks.

Great Wolf said in a statement that it had received an unsolicited letter from KSL proposing to buy the company for $7 a share in cash. That bid came in reaction to the company's latest agreement to sell itself to Apollo for $6.75 a share, or $225.7 million.

Apollo originally struck a deal in March to buy Great Wolf for $5 a share, or around $165 million. But KSL, which focuses on travel and leisure businesses, made an unsolicited bid of $6.25 a share for the water park company last week, prompting larger rival Apollo to strike a new, 35 percent higher deal on Friday.

Great Wolf's popularity as a drive-to family vacation destination has shielded it from slow economic growth and relatively weak consumer confidence, making it a hot property in the eyes of buyout firms looking for assets with strong cash flows.

In 2011, its earnings before interest, tax, depreciation and amortization close to doubled year-on-year to $83 million.

As part of its arrangement with Apollo, Great Wolf could have to pay up to $9 million for a breakup fee and expenses should it walk away from the deal.

Shares in Great Wolf closed at $6.58 on the Nasdaq on Thursday.

(Reporting by Michael Erman; Editing by Dale Hudson)