Papa John's is hopeful it can get Papa John on board with its recently announced Starboard deal (PZZA)


Papa John's is hoping to get founder John Schnatter on board with its recently announced deal with Starboard Value, its CEO said Tuesday.* 

"Obviously, we're hopeful we can bring John along," Papa John's CEO Steve Ritchie told CNBC. "John believes in the core values of the brand that I’ve talked about on quality and people. "

Schnatter resigned as chairman in July 2018 after he used a racial slur on a media training conference call. Negative headlines following the event had resulted in massive North America same-store sales declines in the third quarter, and were expected to continue impacting the company, Papa John's said in November. 

Since Schnatter stepped away from the company, the pizza chain has been exploring a sale of itself. CNBC reported in September that Schnatter, who owned about a 31% stake at that time, was talking with private-equity firms about buying back the company. Schnatter, through a spokesperson, denied CNBC's report. 

On Monday, Papa John's announced a $200 million strategic investment from the hedge fund Starboard Value, and appointed Starboard CEO Jeffrey Smith as its chairman. The company also appointed three new directors, including Smith and Ritchie, to its board.

“The decision we arrived at is in the best interest of its shareholders and stakeholders,” Ritchie said. 

The new acquisition diluted John's stake from 31% to 26%, according to CNBC, citing sources familiar with the matter. Schnatter presented a competing plan to Papa John's board on Saturday, after he learned about Starboard’s proposal, but the company rejected it, according to a filing with the Securities and Exchange Commission.

Papa John's was up 10% so far this year.

*The headline and lede have been corrected. Initially, the post said Papa John's was hoping to bring back founder John Schnatter. It was corrected to say Papa John's wants to get Schnatter on board with the Starboard Value deal. 

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