Papa John’s Gets a Cash Infusion and a New Chairman
Papa John’s has spent a year stumbling over media gaffes of its founder and negative reports about a sexist corporate culture, which resulted in a 44% drop in share price. But now it’s received an injection of good news.
Activist investor firm Starboard Value is investing $200 million into the beleaguered pizza chain and Starboard CEO Jeffrey Smith will become the chairman of Papa John’s, the Wall Street Journal reported on Monday morning.
The $200 million will represent between 11% and 15% of outstanding common stock. Starboard will also have the option to purchase an additional $50 million through March 29 and there is a potential opportunity for franchisees to purchase $10 million through March 31.
Papa John’s shares (PZZA) were up more than 5.3% in pre-market trading.
Smith becomes one of two new independent directors on the board. The second is Anthony Sanfilippo, former CEO and chairman of gambling and hospitality company Pinnacle Entertainment, according to a statement from Starboard. Steve Ritchie, Papa John’s CEO, will also be added to the board.
Starboard took over the board of Darden Restaurants, owner of Olive Garden, in a 2014 proxy fight and went on to turn operations and finances around within 18 months.
Papa John’s shares took a hard drop on Friday after the company announced that it would no longer look for a buyer when private equity companies didn’t offer enough.