Papa John’s spikes after equity firms reportedly fight for its buyout

Papa John’s employeesAP

• 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.

Resuters 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.

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.

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