Papa John's shares plummet as hedge fund drops potential bid: Report

Papa John’s shares plunged more than 12 percent on Tuesday after a report that a hedge fund considered a top candidate to buy a stake in the struggling pizza chain is no longer interested in submitting a bid.

Trian Fund Management, which owns a stake in the Wendy’s fast-food chain, has decided not to make an offer, The Wall Street Journal reported, citing multiple sources familiar with the matter. The fund had been exploring a potential offer since at least last June, shortly before the pizza chain’s founder, John Schnatter, stepped down as chairman after he admitted to using a racial slur during a May conference call.

Trian’s reasons for opting not to make an offer were unclear. Representatives for Papa John’s did not immediately respond to a request for comment.

Papa John’s board of directors tapped a special committee to explore a potential sale of the company last August. The chain has seen sales dwindle in recent quarters amid a series of PR mishaps involving Schnatter and a surge from digitally savvy competitor Domino’s.

The Wall Street Journal previously reported that several other hedge funds, including KKR, Bain Capital and CVC Capital Partners, were competing to buy a stake in the company. None of the firms are reportedly interested in buying the entire company.

Schnatter has two pending lawsuits against Papa John’s related to the company’s handling of his departure last July.