Private-equity firm Apollo Global Management intends to add to its leisure-travel holdings with the acquisition of Great Wolf Resorts for approximately $157 million. Including the assumption of Great Wolf's outstanding debt, the deal is worth about $703 million, Apollo said.
Great Wolf owns and operates 11 resorts with indoor water parks (10 in the U.S., one in Canada) under the Great Wolf Lodge brand. Its first resort opened in 1997 in Wisconsin Dells.
Through a cash tender offer expected to commence on March 13, Apollo will make an offer to purchase all outstanding shares of Great Wolf common stock for $5 per share.
Apollo said the offer represents a premium of 72.9% over the six-month average of Great Wolf's share price ending on March 12 and a 19.3% premium over Great Wolf's closing stock price on March 12. The company's stock price rose 27% on Tuesday to $5.32.
Great Wolf reported a net loss of $25.7 million in 2011, and it lost $51 million the year before. The company's 2011 revenue increased 7.5%, to $296.7 million.
In a statement on Tuesday, Standard & Poor's Ratings Service said, "Despite slow economic growth and relatively weak consumer confidence, Great Wolf performed well in 2011, likely benefiting from its business position as a value-oriented, drive-to family vacation alternative. For 2012, we expect revenue per available room (RevPAR) at Great Wolf to grow in the low-single-digit percentage area, incorporating our expectation for 3% to 6% RevPAR growth for the overall lodging industry."
The transaction was unanimously approved by Great Wolf's board of directors, which is recommending that Great Wolf stockholders tender their shares in the offer.
Pursuant to the proposed acquisition, Great Wolf's board adopted a shareholder-rights plan, which enables shareholders to buy shares at a discount in the event of a hostile takeover attempt.
"We are very excited to support the continued growth of Great Wolf Resorts," said Aaron Stone, senior partner at Apollo Global Management. "Great Wolf has built a remarkable company with an outstanding family leisure and entertainment offering. We feel very fortunate to have the opportunity to continue the company's commitment to provide the very best in family destination resorts."
Apollo's other travel holdings include Caesars Entertainment, Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.