Reuters: Private Equity: UPDATE 3-Investors unhappy as Great Wolf deems KSL bid superior

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UPDATE 3-Investors unhappy as Great Wolf deems KSL bid superior Apr 16th 2012, 16:38 Mon Apr 16, 2012 12:38pm EDT * Apollo has 3 days to match or better KSL's offer * Shares down 5 pct By Tanya Agrawal and Sharanya Hrishikesh April 16 (Reuters) - Great Wolf Resorts said KSL Capital Partners' offer was "superior" to that of Apollo Global Management's bid, but its shares fell as much as 5 percent on Monday morning, indicating investor disappointment that the company's valuation may not see further upside. KSL's last bid stood at $7 per share, valuing the company at $234 million, however Great Wolf's shares had closed at $7.43 on Friday as investors bid up the price on expectations of higher offer. Neuberger Berman Multi-Cap Opportunities Fund portfolio manager Richard Nackenson valued the stock at $8 to $9 per share, based on an analysis of 2013 free cash flow. "When there is an opportunity to refinance some of the higher cost debt, we can see a higher valuation. These factors demonstrate that there is potential for more value here", he said. Neuberger Berman is one of Great Wolf's largest shareholders with a 5.9 percent stake in the company as of Dec. 31. Great Wolf's largest investor, HG Vora Capital, had recommended shareholders reject Apollo's bid last week, and said it would not back another bid until it was convinced the board had done everything it can to get a higher price. Great Wolf had been shopping itself for most of last year, and had contacted 38 possible buyers. KSL and Apollo were one-upping each other even during that initial bidding process. The company finally agreed to be bought out by Apollo for $5 per share offer in March, angering investors who called the price 'woefully adequate', and leading KSL to start the now public phase of the bidding war. After a round of competitive bidding with KSL during the long Easter weekend, Apollo's final bid stood at $6.75. Great Wolf said in a statement on Sunday, it has provided a written notice to Apollo that it is prepared to terminate their merger agreement, if it does not make a new offer within three days. A decision on the proposals will be made at the conclusion of the three business days and Great Wolf said that the board is not making any recommendation at this time with respect to the KSL offer. Great Wolf will have to pay Apollo $9 million, if it accepts the higher offer. Shares of the company were trading down nearly 3 percent at $7.23 on Monday on the Nasdaq. Link this Share this Digg this Email Reprints

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