On September 26, a source familiar with Papa John’s (PZZA) situation told CNBC that Papa John’s founder, John Schnatter, who owns ~30% of the company, was reaching out to private equities to discuss making an offer to buy back the company. The source also added that many of the private equity firms have turned down Schnatter’s offer due to risks associated with his reputation.
The report caused the company’s stock price to rise to a high of $51.27 before closing at $50.14, which represents a rise of 8.5% from the previous day’s closing price.
However, Schnatter’s spokesperson denied the report. In a statement, the spokesperson stated, “John Schnatter has not reached out to or had any discussions with any private equity firm or any other entity about buying Papa John’s. Any such report about a potential transaction involving Mr. Schnatter is totally and completely false.”
The source added that Papa John’s management was in talks with potential acquirers. However, the source cautioned that the talks are still in the initiation stage and might not result in the sale.
On July 11, Schnatter stepped down as the chair of Papa John’s board following reports that he used a racial slur during a media training call. Since then, Schnatter and Papa John’s board have been locked in a bitter battle, which caused the company’s stock price to fall. The company’s stock price has fallen 10.6% in 2018.