Papa John’s International, Inc., Louisville, Ky., announced plans to receive a $200 million strategic investment from Starboard Value LP, New York.
In connection with the investment, the board of directors is expanding to include two new independent directors—Jeffrey Smith, chief executive officer of Starboard, who was appointed chairman of the Papa John’s Board, and Anthony Sanfilippo, former chairman and CEO of Pinnacle Entertainment, Inc. Their expertise and new perspectives will help support the company’s strategy to capitalize on its differentiated “BETTER INGREDIENTS. BETTER PIZZA.” market position and build a better pizza company. In addition, Steve Ritchie, Papa John’s president and CEO, was appointed to the board.
“Our agreement with Starboard concludes a comprehensive strategic review conducted over the past five months to better position Papa John’s for growth, improve the company’s financial performance and serve the best interests of our stakeholders. This transaction provides the company with financial resources and strong and experienced directors on the board in order to position the company for success over the long term. We believe we have found terrific partners to advance Papa John’s strategy, especially given their record of reinvigorating and growing premier restaurant and consumer brand companies,” says Olivia Kirtley, a member of the Special Committee and most recently chairman of the Papa John’s Board. “Starboard’s investment represents a strong vote of confidence in Papa John’s, our people, our franchisees and the many opportunities we have ahead.”
“Our agreement with Starboard marks an exciting step forward for Papa John’s,” adds Ritchie. “I look forward to working with Jeff and Anthony, as well as the rest of our board and team, to extend our focus on better to our people, franchisees and customers in new ways, thereby fortifying Papa John’s position as the ‘BETTER INGREDIENTS. BETTER PIZZA.’ company.”
“Papa John’s has always stood for higher quality pizza, and we believe Papa John’s has a strong foundation with the best product in the space and a strong franchisee and customer base,” says Smith. “We applaud the actions that the board and management have taken to move the company forward through a difficult transition. We see tremendous potential for the company both in the U.S. and internationally. We look forward to providing leadership, sponsorship and support to instill operational, financial and corporate governance best practices, and working with the Papa John’s team to develop a disciplined long-term strategic plan while delighting our customers every day.”
The company plans to use approximately half of the proceeds of the investment to re-pay debt, with the remaining proceeds providing financial flexibility that enables Papa John’s to invest capital to further advance people, brand, value/product, technology and unit economics.