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Apollo fighting back against Great Wolf Lodge shareholders opposing its $5-a-share bid

By
Josh Kosman
Published March 22, 2012, 4:00 a.m. ET

Leon Black’s Apollo Global Management must be hoping that history does not repeat itself.

The firm is fighting back against some Great Wolf Lodge shareholders who have said its $5 a share tender offer is unfair.

It is a rematch of sorts.

Last year, Neuberger Berman, one shareholder of the indoor water-park chain, led a successful fight against Apollo’s agreement to buy the Cedar Fair amusement-park chain.

Since Sandusky, Ohio-based Cedar Fair abandoned that $11.50 deal, its stock has almost tripled to close yesterday at $29.41.

Supporters of the Great Wolf $5 offer are now making the case that there are significant differences between Cedar Fair and Great Wolf.

Madison, Wis.-based Great Wolf’s shares closed yesterday at $5.53, more than 10 percent over the March 13 tender offer.

Great Wolf CEO Kimberly Schaefer stressed in a Bloomberg interview that she looked for the highest bid in an open sales process. That is different from Cedar Fair, which didn’t hold an auction.

Apollo, filings show, raised its bid four times.

KSL Capital Partners and MidOcean Partners also pursued the Wolf, sources said.

Supporters of the deal say the price is full. The $5 offer is 73 percent above Great Wolf’s one-year average.

Amusement chains trade historically between seven and 10 times earnings, making the 7.6 times 2012 Ebitda multiple decent considering the quality of the business and where we are in the cycle, said one source not involved in the deal.

Great Wolf, too, is having a difficult time growing because of restrictive debt covenants, deal supporters said. The heavily levered business has already violated a covenant that secures two of its 11 properties.

Apollo, in the $703 million buyout, would assume the debt, and likely be investing significant new equity to help the business grow, sources said.

An Apollo spokesman declined comment.