Papa John’s Stock Surges 12% on Report that Activist-Fund Trian Is Mulling a Takeover
Papa John’s ugly year of turmoil may finally bring shareholders some welcome news: Trian Fund Management, a hedge fund led by activist investor Nelson Peltz, is evaluating a takeover of the pizza chain, the Wall Street Journal reports. The news caused Papa John’s stock to surge 12% late Monday.
Other parties, including companies and private-equity funds, have also expressed interest in buying Papa John’s, the Journal said. Trian is a notable suitor because of its experience investing in the food industry and because it’s known for working with the management of struggling companies.
Trian owns about 13% of Wendy’s, where Peltz is non-executive chairman and Trian holds two other board seats. Peltz also won a board seat on Procter & Gamble, after a contested shareholder vote, as well as Sysco. He previously served a director on H.J. Heinz’ board. In 2011, Trian became the largest shareholder in Domino’s Pizza and pushed the company to update its menu. Trian sold its stake in Domino’s a year later at a profit.
Founded 34 years ago, Papa John’s has expanded into 5,000 locations in 45 countries, becoming the third-largest pizza-restaurant chain in the world, after Domino’s and Yum Brand’s Pizza Hut. The company was plunged into controversy in July after its founder John Schnatter made racist comments on a conference call, prompting his departure as chairman after an acrimonious battle with the board.
Last month, Papa John’s reportedly began soliciting bids from others willing to take it over, hoping to either find a buyer by the end of October or arrange alternative financing, such as a partial investment. That news helped bring Papa John’s stock out of a tailspin. Papa John’s stock is up 39% from its low-point in 2018, although it’s still down 11% from a year ago.