Apollo Dives into Water Park Business With $167M Great Wolf Buyout

Private-equity firm Apollo Global Management (NYSE:APO) cannonballed into the water-park world on Tuesday by launching a $167 million takeover of Great Wolf Resorts (NASDAQ:WOLF).

The leveraged buyout of Great Wolf values the Madison, Wisc.-based indoor water-park operator at $5 a share, translating to a 19.3% premium on its Monday close of $4.18.

With 11 water parks in places like Kansas City, Kan., Niagara Falls, Ontario and Williamsburg, Va.,Great Wolf says it is North America’s largest family of indoor water park resorts. The resorts typically include 300 to 600 rooms and entertainment areas of up to 100,000 square feet.

“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,” Aaron Stone, senior partner at Apollo Global, said in a statement.

When debt is included, the total transaction value rises to $703 million.

“After a thorough assessment, we concluded that the proposal put forth by Apollo is the best way to maximize value for shareholders, who will receive a substantial and immediate cash premium for their shares,” said Great Wolf CEO Kim Schaefer.

Meanwhile, Great Wolf said it adopted a shareholder rights plan that will kick in if any person or entity acquires more than 12.5% of its common stock. The company said the plan is part of an effort to ensure it has enough time to weigh opposing offers and offer shareholders maximum value.

Shares of Great Wolf soared 22.01% to $5.10 Tuesday morning. During premarket action, shares climbed above $5.30 in a possible sign that Wall Street believes another suitor could trump the Apollo bid. Apollo shares ticked up 0.21% to $14.30.

Deutsche Bank (NYSE:DB) advised Great Wolf on the transaction, while Morgan Stanley (NYSE:MS), UBS (NYSE:UBS) and Nomura (NYSE:NMR) worked with Apollo.