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Now you have to wonder why the new bid is suddenly superior to Apollo. Is the CEO finally realizing that she has to please investors, or does she stand to get a bigger "bonus" from KSL?

Hopefully others will learn from this and the FUN deal when considering to be bought by Apollo.

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Now KSL Capital Partners sweeten the deal to $7.25 cash. Today's development requires shareholders, and regulators, to look carefully at the ever escalating break-up fees Apollo is granted at every move.

How the prior Apollo offer was allegedly superior is a mystery. Apollo simply had meet, not exceeded, the $7.00 KSL Capital Partners offer.

The continued ratcheting up of the break-up fee with Apollo should also trouble shareholders--particularly when no additional consideration, above that already on the table, is offered. Given the offer is not better for shareholders than the offer it supposedly topped how does that merit an additional $.33 million fee?

Recently published analysis suggesting Great Wolf may have a bias for Apollo offers due to the more likely retention of management by Apollo. Shareholders must ask who primarily benefits from such a deal, and if it is appropriate for those beneficiaries to do so.

Management is already rewarded in the merger proposal due to the change in control provisions of employment contracts. Thus the Board has adequately compensated management for the displacement of their jobs.

Shareholders may find all of this a moot point however. Shareholders have expressed a reluctance to tender shares into the deal--only 3.4 million shares have been tendered--out of a required roughly 16.5 million shares.

Like the bad Apollo Cedar Fair deal, shareholders may find the best alternative is to simply pass up on this offer.

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This is still getting quite interesting. WOLF once again decided to accept KSL's offer, according to the WSJ/Dow Jones Newswires:

http://online.wsj.com/article/BT-CO-20120419-710878.html

Great Wolf's board said it now considers the KSL bid a "superior proposal," and has told Apollo that it will terminate the agreement unless Apollo makes adjustments before 11:59 p.m. EDT on Tuesday.

They can't go much higher without offering more per share than what it's currently trading at (though I imagine investors would be willing to pay even more given the current trend and how much this bidding war has affected current prices).

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The continuing escalation of the break-up fee should trouble all shareholders. Essentially Apollo is collecting interest on the delays caused by the low-ball offer they made. Note Apollo blocks shareholders from collecting interest for delays in the payment and closing of the deal once shares are tendered [or taken].

One thing we can be certain of--the company has not yet reached full valuation. We know this as Apollo requires a profit premium expectation when doing a deal. So even at the "inflated" price of $7.85 per share the true value of the company is not necessarily exposed. That management and the board have no accurate measure, or sense, of the company value is, to say the least, troubling.

Perhaps Apollo intends to divvy up the company upon acquisition. That could account for the rather odd mortgage change in control provisions being sought. Perhaps a WOLF is at the door. The division of the parts might be worth more than the whole.

Again, I shall say, it could all be academic soon. Should shareholders or mortgage debt holders simply decide not to tender shares and rights at the current price the deal would be destine for failure.

Then shareholders would have a FUN new job--reforming the board and management.

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The Wisconsin State Journal is reporting KSL Capital Partners have bowed out of the bidding for Great Wolf Resorts. That leaves the offer on table at $7.85 from Apollo. Note less than 10% of the shares have been tendered (and many of those are management/board shares required to be tendered under Apollo's deal) thus leaving management the task of picking up roughly 42% more tenders in the next 14 days:

http://host.madison.com/wsj/business/great-wolf-free-for-all-continues-board-approves-apollo-s/article_2f535e20-8aff-11e1-a892-001a4bcf887a.html

It will be interesting to see if shareholders and mortgage debt holders join in the buy-in of this deal and tender or agree to new change in control provisions.

Again it is worth considering the new climate WOLF may enjoy operating in. Credit has loosened, thus making debt refinancing more available and on much more attractive terms. Occupancy rates for hotels and attendance at amusement parks is expected to have big gains this summer and fall. Given the opportunity to sort the company out, almost on auto-pilot, shareholders may question the need to be sold out.

New leadership is needed at Great Wolf.

Not new ownership.

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Today a most interesting analysis of how the Management, Board, and advisory bank DB got the valuation all wrong in the Great Wolf offer. To over simplify the board and DB assumed the fair offer price was the price which was offered. Hum.

To read the complete article, please see here:

http://blogs.wsj.com/deals/2012/04/22/dealpolitik-great-wolf-shows-shortcomings-of-banker-valuation-opinions/?mod=google_news_blog

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Now Motley Fool weighs in on the Apollo Great Wolf Deal. They predict Apollo will sell off resorts and move to licensing and management fees as the revenue streams. The also predict growth by bringing other properties into the Great Wolf fold--a strategy management has abandoned in the review and recent evaluation of the company.

They also forecast debt refinancing and promotional spending to increase occupancy rates and daily revenues per room. This has all been predicted--right here on this very board--weeks ago.

For the complete article please see:

http://beta.fool.com/buffettbeater/2012/04/25/wolf-lodge-or-sheep-shack/3939/?ticker=SIX&source=eogyholnk0000001

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Not at all related to the buyout, but a funny anecdote out of rural PA:

http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20120427/NEWS/204270344/-1/NEWS01

Pocono Township officials are not exactly flush with good news about their multimillion-dollar central sewage treatment project.

Great Wolf Lodge, the indoor water park resort in Scotrun, has confirmed it has no plans to join the system at this time.

That's no small thing.

Without its participation, estimated yearly sewer costs for users could rise almost 17 percent, according to project officials.

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  • 2 weeks later...

Great Wolf Resorts is now a property in the Apollo stables. The announcement was made today that adequate numbers of shares were tendered by the Friday deadline. See story here:

http://host.madison.com/wsj/business/sale-of-great-wolf-resorts-to-apollo-approved/article_78db6060-9635-11e1-9cc4-001a4bcf887a.html

The entire board, except the CEO, has resigned, and they have filed to stop trading of shares on NASDAQ.

The shareholders worked very hard to improve the offer from $5.00 to $7.85 per share. Not bad for a months work.

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Interesting that the CEO is now saying that she "hopes to stay on with the company". I wonder what happened to that big bonus she was supposed to get if they fired her?

Will be quite interesting to see where things go from here. Hopefully this works out well.

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  • 2 years later...

The worm turns: Apollo Management now reported as taking steps go public with Great Wolf Resorts or engage in a sale of the company. This is a quick turn of events, as Apollo only acquired Great Wolf in 2012 after a battle royal. Recall the original Apollo offer was $5.00 per share and activist investors supported a bidding war which resulted in a final acquisition price of $7.85 per share--one of the largest gains ever in the markets for this type of merger.

Seems Great Wolf was worth substantially more if Apollo can now contemplate selling for, or otherwise harvesting, a significant gain less than three years post merger.

See more details here:

http://www.reuters.com/article/2015/02/04/us-greatwolfresorts-m-a-exclusive-idUSKBN0L82NW20150204?nl=business&emc=edit_dlbkam_20150205

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Nevertheless, the hospitality industry is riding high. The economy has rebounded and $2-$2.50 a gallon gas will likely prompt more families to hop in the car for a vacation this season. Around here in Indy, there have been a flurry of hotel announcements in the past couple of months (rehabs of old buildings into hotels plus new construction). This is probably a good time to unload Great Wolf. Perhaps Hyatt, Marriott or Hilton are interested in acquiring a stable of waterpark hotels with good brand recognition?

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