Qatari-backed fund looking at acquiring Papa John’s, stock soars

Shares of struggling pizza chain Papa John’s surged more than 18% yesterday, February 13, following a Semafor report that the investment fund Irth Capital Management, backed by a member of the Qatari royal family, is considering taking the company private.

Papa John’s jumped more than 18% yesterday to close at $51.28 per share, a three-month high. According to Semafor, Irth Capital Management, cofounded by a Qatari royal family member, Sheikh Mohamed “Moe” al Thani, is exploring a potential acquisition of the pizza chain, having spoken with advisors. The Semafor article also noted that Irth disclosed a 4.99% stake in Papa John’s last year.

Investors welcomed the news, Barron’s reports: “While discussions are likely still at early stages, the market’s positive response indicates investors are confident that Irth could help Papa John’s turn around.” 

Papa John’s has been struggling for years as higher inflation has forced consumers to cut back on restaurant spending, Barron’s notes.

In the third quarter of 2024, the company reported a 3% year-over-year decline in revenue to $507 million. Comparable sales — measuring sales in the same locations — fell 6% in the U.S., compared to a 3% drop internationally. However, net income was 2.6 times the previous-year amount, at $41.8 million.

“During the third quarter, we delivered earnings in line with our expectations in what continues to be a very challenging consumer environment,” said Todd Penegor, Papa John’s president and CEO, commenting on the results.

Talk of Papa John’s being bought is nothing new, Barron’s notes. In 2018, activist investor Nelson Peltz’s Trian Partners explored buying the chain, but no deal materialized. The next year, the company raised up to $250 million from hedge fund Starboard Value LP in an equity investment.

Excluding yesterday’s rally, Papa John’s stock is down 40% over the last 12 months.

According to MarketWatch, 19 analysts currently track the company: 10 have “buy” calls, while nine say “hold.” Their average target price is $55.83 per share, implying nearly 9% upside versus the last closing price.