Papa John's shares rise amid buyout rumors
Papa John’s shares were trading higher on Wednesday after a report that multiple private equity firms are competing to buy the embattled pizza chain.
Bain Capital and CVC Capital Partners are each competing to buy the company, which has dealt with sagging sales in recent quarters amid a protracted power struggle between Papa John’s board of directors and its ousted founder, John Schnatter, Reuters reported this week. KKR & Co. and Roark Capital are also mulling offers.
A special committee composed of members of Papa John’s board of directors is said to be considering various options for the company’s future, including a potential sale. Offers are expected within the next few weeks, according to the report.
Papa John’s denied Reuters’ request for comment on the report. Company shares rose more than 9 percent when the report first surfaced on Tuesday.
Schnatter was forced to resign as chairman of the board last July after he admitted to using a racial slur during a May conference call with marketing executives. Papa John’s executives later said the controversy had a negative impact on July sales and enacted a “poison pill” measure designed to prevent Schnatter, the company’s largest shareholder, from acquiring a larger stake.
Schnatter has two pending lawsuits against his former company related to his exit from the company. He recently asked a district court to reverse an element of the poison pill measure that prevents Schnatter and other shareholders from talking to potential outside investors.