Papa John's will probably be sold next year, says analyst

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The pizza chain "Papa John's International Inc." will probably be bought back in the next year, according to Mark Kalinowski, chairman of Kalinowski Equity Research.

The Wall Street Journal announced Monday that Trian Fund Management LP was evaluating a possible takeover bid, sending stocks up sharply after trading hours. Shares closed Tuesday up nearly 9%.

Last week, investor activist Legion Partners and the California State Teachers' Retirement System took a stake in Papa John's.

In August, it was reported that the company hired advisors to evaluate the options, but at that time there was no discussion of strategic alternatives or a sale.

"The chances are good that the company will be sold in the next 12 months," Kalinowski told MarketWatch. "There is a lot of incentive to get there."

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Papa Johns

PZZA, + 8.89%

is the third largest pizza delivery chain in the world after Domino's Pizza Inc.

DPZ, + 1.41%

and Pizza Hut, which is a Yum Brands Inc. brand

YUM, + 0.60%

chain.

"The pizza industry is a global business," said Kalinowski. "It's bread, cheese and everything you want to put on bread and cheese. It is something that works for all the cultures of the world. It is not often that this kind of opportunity presents itself. Opportunities arise because companies stumble. That's exactly what happened with Papa John's. "

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Papa John's is currently fighting a permanent battle with its founder, John Schnatter, who has been ousted from his position as General Manager following a series of controversies. Schnatter blamed the NFL players for a drop in the company's sales. (He apologized later.)

Schnatter resigned from his post as CEO after learning that he had used a racial insult during a teleconference. (He later regretted the move.)

At the end of September, it was reported that Schnatter was looking for a private equity partner to buy the company.

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After reports of racist incidents, the Wall Street Journal said the merger talks with Wendy's Co.

MAGNIFYING GLASS, + 0.98%

stopped. Trian holds a 13% interest in Wendy's.

Schnatter owns nearly 30% of Papa John's shares.

"Is Papa John so big that he can not be acquired?" Asks Kalinowski. "No. Is it recoverable, yes, does it offer things that could work for the right buyer?"

Kalinowski notes the purchase of Papa John shares with a target price of $ 68.

Papa John's shares are down 21% from a year ago while the S & P 500 index

SPX, -0.14%

rebounded 13.2% over the period.