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Trian pieces together interest in Papa John’s: WSJ
Posted on Tuesday, 09 October 2018 09:01
Shares in Papa John’s International finished 8.2 per cent higher in extended trading yesterday after the Wall Street Journal (WSJ) reported an activist hedge fund has opened up lines of communication with the pizza chain.

According to the newspaper, Trian Fund Management, which has a minority stake in Wendy’s, is asking for information on which it could base a potential bid, though the suitor is merely one of several restaurant and buyout firms interested in the business.

Should the activist investor table an offer, it may buy and operate the chain separately or could acquire the takeout and delivery services provider through the aforementioned burger group.

The WSJ added Trian has three seats on the board of Wendy’s, as well as a 13.0 per cent stake, and is “best known for working with the management of struggling companies”.

Earlier this year, in June to be exact, the fund’s co-founder asked Papa John’s John Schnatter whether he would meet and talk with executives of the burger chain, though the newspaper could not provide any further information on the matter.

Trian is by no means the only activist investor drawn to the chain, after all, at the beginning of October. Legion Partners Asset Management and the California State Teachers' Retirement System announced they jointly held a 5.5 per cent stake.

In the disclosure filed with the US Securities and Exchange Commission, the two said the current market price (USD 1.59 billion capitalisation at the time of writing) does not reflect intrinsic value.

While they are encouraged by the way the special committee has worked on moving past recent controversies, they also believe “multiple potential paths to significantly higher valuations exist” through “strategic partnerships or improving operations as a stand-alone company”.

They “believe that meaningfully higher earnings power than the company has demonstrated historically is attainable through a combination of cost efficiencies and refranchising of company owned operations”.

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