Great Wolf Buyout Game Needs High Roller All-In Bet

"It's very unusual to see that the company hasn't allowed KSL to do a due diligence. They are basically favoring Apollo and allowing it to increase the termination fee," says Shah, who sees recent bids as still below the fair value of Great Wolf Resorts, which he pegs at between $8 and $8.60 a share. Shah says that "$7.25 is not going to do it; Apollo will either have to come in at 7.50 or walk away."

Meanwhile, the slowly rising breakup fee to be paid to Apollo in a failed bid is now at $9.33 million -- roughly 28 cents a share -- and a big cost for a company that entered February with a market cap of $128 million, adds Shah.

Large shareholders agree that Great Wolf Resorts, the Wisconsin-based owner of 11 water park themed resorts, is worth far more than Apollo's offers. PWK Partners, a 4.2% shareholder, said in an April 3 letter that the company is worth $10 per share. The investment firm also noted that it didn't believe "selling the company to a private equity buyer is the best avenue to maximize shareholder value in the current environment."

Other shareholders simply feel that at this stage in the bidding process, both KSL and Apollo have ample finances to up antes in the bidding showdown.

"This is playing out as expected," said the Great Wolf shareholder. "KSL could pay more because they can cut out costs, while Apollo has a lower cost of capital because of the $75 billion in assets that it manages." KSL is a real estate focused fund with large resort investments like the La Costa Resort and Spa. Apollo is one of the world's largest private equity firms.

Great Wolf Resorts shares rose nearly 4% to $7.42 in Thursday trading, putting its year-to-date gain at over 150%.