Great Wolf in Apollo Suite - Analyst Blog

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Great Wolf Resorts Inc. ( WOLF ) recently has agreed to be acquired by an affiliate of Apollo Global Management, LLC ( APO ) for approximately $703 million, assuming the company's outstanding debt.

The private equity behemoth, Apollo made an offer to purchase all outstanding shares of the Great Wolf common stock for $5.00 per share. As of March 12, 2012, the offer price equates to a premium of 72.9% over the six-month average of Great Wolf's share price, premium of 50.4% over the ninety-day average of Great Wolf's share price, and a 19.3% premium over its closing stock price.

Opened in 1997, North America's largest family of indoor water park resorts - Great Wolf - currently operates 11 properties across the continent. These properties comprise 300-600 rooms and a large indoor entertainment area along with several other amenities.

The superior family leisure that Great Wolf offers is not supported by its cash position. At the end of the fourth quarter of 2011, Great Wolf had $33.8 million in cash and cash equivalents while its total debt was $515.2 million. Although its revenue was growing, the company was making losses. In 2011, revenue went up 7.5% to $296.7 million, but loss per share was 82 cents versus a loss of $1.65 recorded in 2010. In such a scenario, Great Wolf management sees Apollo's offer as a lucrative one as it will increase the company's shareholder return substantially.

Great Wolf which competes with the likes of Marcus Corp. ( MCS ) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.


 
APOLLO GLOBAL-A ( APO ): Free Stock Analysis Report
 
GREAT WOLF RSRT ( WOLF ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: APO , MCS , WOLF

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