Shares of Great Wolf Resorts Inc WOLF.O rose as much as 13 percent on Monday to trade above the highest buyout offer the company received, a sign that investors expect a higher bid for the indoor water park resorts operator.
On Sunday, private equity firm KSL Capital offered to pay $7 a share for Great Wolf, topping Apollo Global management's (APO.N) raised offer of $6.75 a share.
Last month, Great Wolf agreed to be bought by Apollo for $5 a share, a figure that outraged some investors, who called it too low and "woefully inadequate."
Great Wolf's shares are inexpensive even at the $7.00 per share price, according to Raymond James analyst William Crow.
"You could probably even justify a higher valuation. It wouldn't surprise us to see the price move up a little bit from here," James said.
In response to shareholder criticism following its initial deal with Apollo, Great Wolf had said it explored strategic alternatives for more than 9 months and reached out to 38 prospective bidders. It added that Apollo's bid had been accepted as the best.
KSL Capital was one of the firms that had looked at Great Wolf during that period, a source familiar with the matter told Reuters.
KSL, which focuses on travel and leisure businesses, did not immediately respond to a request for comment.
Great Wolf's board said on Sunday that it was evaluating KSL's offer and declined further comment.
If the company's board accepts KSL's bid as superior, Apollo would have three days to match the offer, according to its merger agreement with Great Wolf.
Earlier this month, PWK Partners, which says it owns about 4 percent of Great Wolf, said the company had an intrinsic value of about $10 per share.
The Madison, Wisconsin-based company's shares were up 13 percent at $7.41 in afternoon trade on the Nasdaq. They last traded at these levels four years ago.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Supriya Kurane, Roshni Menon)