By Jochelle Mendonca
April 5 (Reuters) - Shares of Great Wolf Resorts Inc rose about 17 percent, a day after the company received a buyout offer from private equity firm KSL Capital Partners that topped its existing deal with Apollo Global.
Late Wednesday, KSL Capital, which focuses on travel and leisure businesses, offered to buy the operator of indoor water park resorts for $6.25 a share in cash, beating Apollo’s bid of $5 a share.
Great Wolf shares were trading above the offer price at $6.59, indicating some investors possibly expect a higher bid. The shares last traded at these levels four years ago.
Great Wolf said its board would evaluate KSL’s offer, but did not comment further.
Last month, Great Wolf shareholder PWK Partners raised serious concerns about the company’s deal with Apollo, calling the $5 bid ‘woefully inadequate’ and some shareholders filed lawsuits against the company.
In response to shareholder lawsuits following the deal, Great Wolf said it had been looking at strategic alternatives for more than 9 months and had reached out to 38 prospective bidders and that Apollo’s bid had been accepted as the best.
“I would not be surprised if someone else stepped up as well, because clearly with KSL’s offer not everyone has looked at Great Wolf,” JMP Securities analyst William Marks told Reuters.
Earlier this month, PWK Partners, which says it owns about 4 percent of Great Wolf, said the company had an intrinsic value of about $10 per share.
“I think (the $10 a share) is a little bit optimistic but even then that would only be 9 times EBITDA, which is still not expensive compared to other hotel companies. I think a $7 price is more likely,” Marks added.
Earlier on Thursday, Great Wolf said that affiliates of Apollo Global would extend their tender offer for its stock to April 20. They did not disclose what percentage of shares were tendered in the offer so far.
As part of the deal with Apollo, Great Wolf was required to adopt a shareholders’ rights plan to thwart hostile acquirers.
Great Wolf will also have to pay Apollo $5.3 million, and up to $1.7 million in expenses, if it accepts a higher offer.
The first Great Wolf Lodge resort opened in 1997 in Wisconsin Dells, Wisconsin and the company now operates 11 properties throughout North America.