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Papa John's International Inc.'s shares grew by more than 6.5% Tuesday morning after Trian Fund Management LP was considering taking over the troubled pizza distribution chain.
The Wall Street Journal, quoting "knowledgeable people," said Trian, led by activist investor Nelson Peltz, had asked Papa John's to ask for a takeover.
Trian and Papa John's spokespeople said they did not comment on the rumors. A spokesman for Papa John's founder and former CEO, John Schnatter, said he also had no comment to make.
The rumors are not the first connecting Peltz and Papa John's. In July, the Journal also reported that Wendy's, whose president is Peltz and whose largest shareholder is Trian, was in talks with Schnatter before resigning as chairman of the board in July, following information that he used a racial insult at a meeting.
Schnatter is still a director of Papa John's and owns approximately 30% of his shares. Shortly after resigning from his presidential post, he regretted his decision, saying that he had been forced to leave his post. Since then, he has fought a fierce battle with the current management of the Louisville, Kentucky, pizza chain run by Schnatter's successor, Steve Ritchie.
Any takeover of the chain would be difficult without the approval of its board of directors, which adopted in July a "poison pill" that would allow current shareholders to buy more shares at a discount if an attempt is made unauthorized inspection, which would make this operation impossible. a much more expensive attempt.
Papa John's, the third largest pizza chain in the world behind Domino's and Pizza Hut, has more than 5,000 locations worldwide.
Same-store sales at its national stores decreased by 6.1% in the quarter ended July 1, 2018 and by 10.5% in July due to negative consumer reaction following comments reported by Schnatter announced the company.
In an article published in July by Forbes, Papa John's portrays a toxic corporate culture, including a litany of inappropriate behavior by senior management.
Since then, Papa John's has embarked on rebuilding its image with an advertising campaign promoting its diversity. Ritchie also appointed a special committee consisting of all of Papa John's directors, except Schnatter, to investigate the company's culture and address potential sensitivity issues.
The shares of Papa John's have been in play for a few weeks while the chain was for sale and with the stock purchase last week by activist shareholder Legion Partners Asset Management LLC.
Contact Bret Thorn at [email protected]
Follow him on Twitter: @foodwriterdiary
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