Papa John’s shares Surge after Starboard’s Jeffrey Smith becomes Chairman, Invests $200 million
February 4, 2019|
The shares of Papa John’s is up 6 percent at the pre-market trading today after the company revealed that activist hedge fund Starboard Value is set to invest $200 million in the company.
Papa John’s set to rival Domino’s Pizza again
Papa John’s has been embroiled in controversies over the past two years which led to the resignation of founder John Schnatter as CEO and chairman of the company. The company also lost ground on some of its rivals including Domino’s Pizza and Round Table Pizza. Papa John’s is now looking to rival these companies again.
Papa John’s shares have plunged by 37 percent over the past year, with that of Domino’s rising by 29.86 percent over the past 12 months.
The company announced that Starboard CEO Jeffrey Smith would become its chairman. He will be joined on the board by Anthony Sanfilippo, former chairman and CEO of Pinnacle Entertainment, with Papa John’s CEO Steve Ritchie also to serve on the board.
According to the Wall Street Journal, Starboard will invest in Papa John’s via a convertible stock purchase of 11 to 15 percent. This news came after the company put together a special committee to review the relationship between Papa John’s and John Schnatter last year. In 2017, the founder stepped down as CEO and stepped down as chairman last year also. His resignations come following a series of errors including using the N-word on a conference call in May last year. He later explained that his comments were taken out of context as he was provoked into making those racial statements.
The company made plans to sell itself but abandoned that plan after receiving low offers from the prospective buyers.