Shares of Papa John’s jumped more than 5.3 percent in the premarket Monday after the company announced activist hedge fund Starboard Value is taking a $200 million stake in the company.
Papa John’s also said Starboard CEO Jeffrey Smith will become its chairman. Anthony Sanfilippo, the former chairman and CEO of Pinnacle Entertainment, will also join the company’s board of directors, as well as Papa John’s CEO Steve Ritchie.
The activist investor is making its investment through a convertible stock purchase, which totals to a stake ranging between 11 percent and 15 percent of Papa John’s shares outstanding. The Wall Street Journal first reported the news.
Monday’s news comes after Papa John’s started a special committee to review the relationship and arrangements made between the company and founder John Schnatter last year. Schnatter stepped down from his post as chairman in 2018 and resigned as CEO in December 2017 after a series of blunders, including using the N-word on a conference call in May. The company also sought to sell itself, but abandoned those plans after not receiving offers that met its valuation expectations.
Smith had not spoken to Schnatter but hopes to work with him, the Wall Street Journal reported. Schnatter is still on Papa John’s’ board of directors and holds a 31 percent stake in the company.
Papa John’s shares have fallen 37 percent over the past 12 months, lagging rival Domino’s Pizza. Shares of Domino’s are up 29.86 percent in that time period.
