Apollo wins bidding battle for Great Wolf Resorts The bidding war for Great Wolf Resorts appears to be over after Apollo Global Management upped its bid to $7.85 per share on Friday, and KSL Capital Partners late that night informed the company it would not submit any further bids. Apollo will pay about $258m for the hotel and water parks operator, plus assume $536m in debt. The offer represents a premium of 87 per cent over Great Wolf's closing stock price on the day before the announcement of the original agreement to buy the company for $5 a share. The fight over Great Wolf developed into an unusual bidding war that pitted two private equity firms against each other. Typically buyout firms do not "jump" on each others" deals. But shortly after Apollo made it's initial offer, KSL, a speciality firm with experience in the hospitality sector, offered $6.25 a share. Apollo countered, and for two weeks the two private equity groups traded bids, with KSL driving the price up to $7.25 on Thursday. Yet Apollo was always in the stronger position. As part of its initial agreement with Great Wolf, it put in place a number of provisions to protect its bid. Among other clauses, it needed only match any other bid to be considered the "superior" buyer. So when Apollo bid $7.85 on Friday instead of simply matching KSL's current offer, it was a sign that the firm wanted the bidding war to be over. It worked, with KSL bowing out just hours later. Great Wolf operates 11 hotel and indoor water parks throughout the US, which are popular destinations for family vacations. The company reported net losses of $26m last year and $50m in 2010, but results have been improving in recent months. And while the company is saddled with poorly structured debt that is hampering organic growth, its resorts produce substantial free cash flow. In winning the battle for Great Wolf, Apollo showed that it learnt from its mistakes. That experience prompted Apollo to take a number of steps to protect its bid. In addition to structuring its bid as a tender offer to expedite the process, it included a "no-shop" provision to hamper other potential bidders and persuaded Great Wolf to adopt a "poison pill" that prevents shareholders from increasing their positions in the company. Great Wolf stock has been rising sharply in recent weeks, often trading higher than the latest bid from either Apollo or KSL. But on Friday the market may have got ahead of itself. Perhaps anticipating more bids, Great Wolf shares opened at $8 and closed just a few cents higher. But with KSL out of the running, Great Wolf shareholders may find that Apollo's $7.85 per share tender offer is the best deal they will get. Deutsche Bank advised Great Wolf, and Morgan Stanley, UBS and Nomura advised Apollo.