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∑ Starboard CEO to Be Papa Johnís Chairman in $200 Million Deal
∑ Papa Johnís stock slides after report of sale-talk breakdown
∑ Exclusive: Papa John's seeks investment after it abandons outright sale - sources
Starboard CEO to Be Papa Johnís Chairman in $200 Million Deal
Former Pinnacle Entertainment CEO Sanfilippo also joins board
Investment includes option to add additional $50 million
By Eric Pfanner and Lisa Wolfson, Bloomberg
February 4, 2019
Starboard Value LP will make its chief executive officer the chairman of Papa Johnís International Inc. via a $200 million investment in the troubled pizza chain.
The activist fundís CEO, Jeffrey Smith, will take over the board role after Papa Johnís founder John Schnatter stepped down as chairman last year after report emerged that he used a racial slur. Shares of Papa Johnís gained 11 percent in premarket trading.
Papa Johnís plans to use the proceeds to repay debt and invest in the business, it said in a statement. Starboard is making its investment through the purchase of new convertible preferred stock, and the deal includes the option of an additional $50 million investment.
Besides Smith, the board added another independent director -- Anthony Sanfilippo, former chairman and CEO of Pinnacle Entertainment Inc. Current Papa Johnís CEO, Steve Ritchie also joins as a director. With the additions, the board now has nine directors.
The board approved the Starboard plan Sunday night, and Schnatter voted against it, according to a person with knowledge of the vote. An email sent to a representative of Schnatter seeking comment wasnít immediately returned.
ďOur agreement with Starboard concludes a comprehensive strategic review conducted over the past five months to better position Papa Johnís for growth, improve the companyís financial performance and serve the best interests of our stakeholders,Ē Olivia Kirtley, a member of the special committee that initiated the review, said in a statement.
In the months following Schnatterís departure, speculation has swirled around the struggling pizza chain, with reports that Wendyís Co. and Trian Management Fund had evaluated takeover bids. But any kind of transaction wouldnít be easy without the backing of Schnatter, who founded the company and owns about 30 percent of Papa Johnís.
Papa Johnís worked to distance itself from Schnatter and removed him from its marketing. In July, the companyís board adopted a poison pill to prevent him from adding to his stake or gaining majority control.
Starboard has previously mounted activist campaigns...
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Papa Johnís stock slides after report of sale-talk breakdown
Pizza brand reportedly seeks new investors after scrapping acquisition plans
Joanna Fantozzi, Nation's Restaurant News
Feb 01, 2019
Shares of Papa Johnís International Inc. fell Friday after a news agency reported the pizza chain was abandoning plans to sell itself to a private-equity company.
Papa Johnís stock prices fell nearly 9 percent Friday, to $38.51 a share from Thursdayís close of $42.29, after Reuters reported early in the day that the Louisville, Ky.-based brand had received disappointing valuation results from several interested parties, a source told Reuters.
Interested parties reportedly included Bain Capital, KKR and CVC Capital Partners. Papa Johnís will instead seek outside investors, a source told Reuters.
Papa Johnís share price has been on a rollercoaster since takeover rumors began in October in the wake of a report in the Wall Street Journal that indicated Trian, headed by activist investor Nelson Peltz, was an interested party. The companyís stock price popped more than 6.5 percent after that report and has seen ups and downs in the months since.
The pizza chain is in the midst of a legal battle with ex-CEO John Schnatter, who resigned as chairman in July after making controversial racial remarks. Schnatter still owns 30 percent of Papa Johnís and has a seat on the board.
Most recently, a Delaware court ordered Papa Johnís to hand over internal documents to Schnatter because he is still the largest stockholder of the company, in a lawsuit that the company initially called ďneedless and wasteful.Ē In an ongoing power struggle with Papa Johnís, Schnatter is seeking to prove that his former company is ďmismanaged.Ē
Given the legal back and forth, analysts expressed skepticism that a buyout would happen soon...
Exclusive: Papa John's seeks investment after it abandons outright sale - sources
Greg Roumeliotis, Reuters
FEBRUARY 1, 2019
(Reuters) - Papa Johnís International Inc, the worldís third largest pizza delivery company, is pursuing the sale of a stake in itself after acquisition offers from private equity firms did not meet its valuation expectations, people familiar with the matter said on Friday.
Any such deal would come amid a battle for control of Papa Johnís with the chainís founder John Schnatter, who owns about 30 percent of the company. Schnatter resigned as chairman last July following reports that he had used a racial slur on a media training conference call. He retains a seat on the companyís board.
The transaction, which could be structured as a private investment in public equity, would boost Papa Johnís finances, the sources said, as the company seeks to recover from low franchisee profitability and boost its sales through promotional discounts.
Shares of Louisville, Kentucky-based Papa Johnís dropped 6.2 percent at $39.63, giving the company a market capitalization of about $1.2 billion.
There is no certainty that Papa Johnís will agree to any deal, the sources said, asking not to be identified because the matter is confidential. Papa Johnís declined to comment.
Reuters reported in October that several buyout firms had shown interest in acquiring Papa Johnís, including...