Papa John's spikes after a report says private equity firms are fighting for a stake in the pizza chain (PZZA)

  • Private equity firms are fighting to acquire a 30% stake in Papa John’s that is controlled by its founder John Schnatter, according to Reuters.
  • Shares of the pizza chain rallied 10% following the news.
  • Papa John’s is likely to be valued at $63.50 per share during a potential acquisition, Jefferies analyst Alexander Slagle recently said.
  • Watch Papa John's trade live.

Papa John's shares rallied 10% Tuesday after a Reuters report said private equity firms are fighting to acquire a stake in the pizza chain.

Reuters reports, Bain Capital and CVC Capital Partners are among the private equity firms competing to buy the 30% stake owned by Papa John's founder John Schnatter, who resigned as chairman in July following reports that he had used a racial slur on a media training conference call.

Private equity firms KKR & Co and Roark Capital have also been vying for Papa John’s, with binding offers expected in the next few weeks, according to Reuters' sources. Hedge fund Trian Fund Management, an investor in fast-food chain Wendy's that had expressed interest in Papa John’s, is said to be considering a potential investment should a deal for the sale of the company not be reached.

RELATED: Papa John's controversial founder John Schnatter

16 PHOTOS
Papa John's controversial founder John Schnatter
See Gallery
Papa John's controversial founder John Schnatter
John Schnatter, founder and chief executive of Papa John's Pizza, arrives at the 2011 American Music Awards in Los Angeles November 20, 2011. REUTERS/Danny Moloshok (UNITED STATES - Tags: ENTERTAINMENT BUSINESS FOOD) (AMA-ARRIVALS)
John Schnatter (R), founder and chief executive of Papa John's Pizza, arrives at the 2011 American Music Awards in Los Angeles November 20, 2011. REUTERS/Danny Moloshok (UNITED STATES - Tags: ENTERTAINMENT BUSINESS FOOD) (AMA-ARRIVALS)
MIAMI, FL - JULY 11: A Papa John's restaurant is seen on July 11, 2018 in Miami, Florida. The founder of Papa John's pizza, John Schnatter, apologized Wednesday for using the N-word on a conference call in May. (Photo by Joe Raedle/Getty Images)
CLEVELAND, OH - OCTOBER 12, 2014: 'Papa' John Schnatter, founder and CEO of 'Papa John's Pizza' takes part in a radio show prior to a game between the Pittsburgh Steelers and Cleveland Browns on October 12, 2014 at FirstEnergy Stadium in Cleveland, Ohio. Cleveland won 31-10. (Photo by Nick Cammett/Diamond Images/Getty Images)
INDIANAPOLIS, IN - MAY 24: Papa John's founder and CEO John Schnatter attends the Indy 500 on May 23, 2015 in Indianapolis, Indiana. (Photo by Michael Hickey/Getty Images)
LOS ANGELES, CA - APRIL 04: John Schnatter and Halston Sage attend a basketball game between the Dallas Mavericks and the Los Angeles Lakers at Staples Center on April 4, 2014 in Los Angeles, California. (Photo by Noel Vasquez/GC Images)
CLEVELAND, OH - OCTOBER 12, 2014: 'Papa' John Schnatter, founder and CEO of 'Papa John's Pizza' takes part in a radio show prior to a game between the Pittsburgh Steelers and Cleveland Browns on October 12, 2014 at FirstEnergy Stadium in Cleveland, Ohio. Cleveland won 31-10. (Photo by Nick Cammett/Diamond Images/Getty Images)
LAS VEGAS, NV - APRIL 07: John Schnatter, Founder and Chairman of the Board for Papa John's Pizza, gives a thumbs up before a charity exhibition race against Antron Brown (not pictured) during the the 19th Annual DENSO Spark Plugs NHRA Four-Wide Nationals Saturday, April 7, 2018, in Las Vegas, Nevada. (Photo by: Marc Sanchez/Icon Sportswire via Getty Images)
NEW YORK, NY - JANUARY 31: John H. Schnatter, Founder, Chairman & CEO of Papa John's International, Inc. rings the NASDAQ Opening Bell at NASDAQ MarketSite on January 31, 2014 in New York City. (Photo by Rob Kim/Getty Images)
NEW YORK, NY - FEBRUARY 01: Dallas Cowboys owner Jerry Jones (L) and Papa John's Pizza founder John Schnatter attend the DirecTV Super Saturday Night at Pier 40 on February 1, 2014 in New York City. (Photo by Charles Norfleet/FilmMagic)
Spider Man and Papa John Founder John Schnatter at the Spider-Man and Papa John's Honor 'Hometown Super-Heroes' October 29, 2007 in Times Square in New York City. (Photo by Mark Von Holden/WireImage)
LOS ANGELES, CA - NOVEMBER 20: Founder of Papa John's Pizza John Schnatter attends the Official After Party for the 2011 American Music Awards held at the Conga Room at L.A. LIVE on November 20, 2011 in Los Angeles, California. (Photo by John Shearer/AMA2011/Getty Images for AMA)
LOS ANGELES, CA - NOVEMBER 20: 'Papa John's' Pizza Founder John Schnatter arrives at the 2011 American Music Awards held at Nokia Theatre L.A. LIVE on November 20, 2011 in Los Angeles, California. (Photo by Frazer Harrison/AMA2011/Getty Images for AMA)
NEW YORK - OCTOBER 29: Founder of Papa John's John Schnatter speaks onstage at the Spider-Man and Papa John's Pizza's announcement of 'Hometown Super-Heroes' in Times Square October 29, 2007 in New York City. (Photo by Bryan Bedder/Getty Images)
LOUISVILLE, KY - MAY 06: Paps John's CEO John Schnatter attends the 132nd Kentucky Derby at Churchill Downs on May 6, 2006 in Louisville, Kentucky. (Photo by Paul Hawthorne/Getty Images)
John Schnatter, founder & Pres. of a chain of Papa John's pizza restaurants, w. employees at one of his 1,049 outlets, making a surprise quality check on a row of pizzas layed out on counter at restaurant. (Photo by Taro Yamasaki/The LIFE Images Collection/Getty Images)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

A special committee formed by Papa John’s board of directors is exploring a sale as part of a wide review of strategic alternatives, and there is no certainty that the company will agree to a sale, the sources added.

No matter who buys Papa John's, investors care most about what the pizza chain might be worth in the event of an acquisition. Jefferies analyst Alexander Slagle recently said that Papa John's is likely to be valued at $63.50 per share during an acquisition — 18% above where shares settled on Tuesday. Slagle made the conclusion by comparing Papa John’s potential deal with Inspire Brands' recent purchase of Sonic.

Pap John's was down 6% this year through Tuesday.

PZZAMarkets Insider

See Also:

Read Full Story