Papa John’s Shares Rise on Report Bain, KKR Among Funds Circling

(Bloomberg) -- Papa John’s International Inc. surged after a report that Bain Capital and CVC Capital Partners are among the private equity firms considering buying the struggling pizza chain.

• “We don’t comment on market rumors,” said Madeline Chadwick, a spokeswoman for the pizza company.

Key Insights

• Speculation continues to swirl around the beleaguered chain. Reuters reported Tuesday that private equity firms KKR & Co. and Roark Capital have also been circling, citing unidentified people with knowledge of the situation. It said binding offers are expected in the next few weeks.
• Earlier reports said that Wendy’s Co. and Trian Management Fund have evaluated takeover bids. But any kind of transaction won’t be easy without the backing of founder John Schnatter, who owns about 30 percent of Papa John’s.
• Hedge fund Legion Partners Asset Management LLC recently took an activist stake in the company. It said the chain can boost investor value by selling restaurants to franchisees, capitalizing on its strength in digital and improving its governance and culture.

Market Reaction

• Papa John’s shares rose as much as 9.8 percent as of 3:29 p.m. in New York, the biggest intraday gain in a month.

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• KKR, Bain and Trian declined to comment, while the other firms didn’t immediately return calls seeking comment.
• A public dispute between the company and Schnatter boiled over earlier this year after news broke that he used a racial slur on a conference call. He resigned as chairman and the board adopted a poison pill in July to prevent him from adding to his stake or gaining majority control.

--With assistance from Scott Deveau and Kiel Porter.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson

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