Activist Investor Buys in to Papa Johns

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After months of turmoil, Papa Johns finally has some sort of concrete news. Many had wondered if the company would be acquired, but today we learned of a $250 million investment from an activist investor. An all-out buyout seems off the table at this point.

Starboard Value will invest up to $250 million in Papa John’s in exchange for stock. The investment will give the activist investor up to 15% of the company.Franchisees will be able to buy another $10 million in stock at the same terms.

In addition to the investment, Starboard will receive a few spots on the company’s board. The CEO of Starboard will become the new Chairman.

Starboard has been down the restaurant road before. They are known for an activist investment in Darden Restaurant Group (Olive Garden) It will be interesting to see what value they may be able to drive at Papa John’s.

On top of the investment, the company also announced preliminary financial results.

For the 4th quarter, same-restaurant sales declined 8.1%

For January 2019, same-restaurant sales declined 10.5%.

With sales trends continuing to be worse than expected (and declining), Starboard has a big job ahead.

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