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Takeover Talks: Papa John’s Stock Rose in After-Hours Trading

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Papa John’s stock price

On October 8, the Wall Street Journal reported that Trian Fund Management, which owns an ~13% stake in Wendy’s (WEN), is considering a takeover bid for Papa John’s (PZZA).

Earlier, Papa John’s management reached out to potential acquirers to submit an offer following its bitter battle with John Schnatter, the company’s founder. He stepped down as the chair of Papa John’s board following reports that he used a racial slur during a media training call. Trian Fund Management was one of several companies that collected information to evaluate a possible bid.

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The Wall Street Journal also reported that people familiar with the matter have stated that there isn’t a guarantee that Trian Fund Management will make an offer for Papa John’s. Other companies and private equity firms are also evaluating the situation. The report caused Papa John’s stock to rise 8.3% in after-hour trading on October 8.

YTD performance

By the end of October 8, Papa John’s was trading at $50.42, which represents a fall of 10.1% since the beginning of 2018. The lower-than-expected results in the first and second quarters and the ongoing battle between the company’s board and Schnatter led to a fall in the company’s stock price.

During the same period, Domino’s Pizza (DPZ) and Yum! Brands’ (YUM) stock prices increased 48.3% and 11.1%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which has invested ~8.1% of its holdings in restaurant and travel companies, has returned 14.0% YTD (year-to-date).

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