Papa John's wants to sell equity stake in the company, report says

Papa John's International, the Louisville-based pizza empire founded by embattled entrepreneur John Schnatter, is looking to sell a stake in its operation after offers to acquire the company didn't meet expectations, according to a Reuters report.

Citing sources who declined to be named, Reuters reported Friday that a possible deal "could be structured as a private investment in public equity" and "would boost Papa John's finances."

Reuters' story noted that it isn't certain if Papa John's would agree to an equity deal. It also said several firms displayed interest in buying the company outright, but none offered a proposal the restaurant chain was willing to accept.

This comes as Schnatter continues to fight for control of the business he founded, which has seen its finances and reputation damaged in the past year.

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The company has faced public derision and drooping sales after Schnatter — the longtime face of the global company — sparked an outcry last year for using a racial slur during a business-related conference call. Schnatter, who is originally from Jeffersonville, Indiana, was quickly ousted as the company's chairman.

Since then, Papa John's has been exploring its options, including the possibility of selling the company entirely. But the likelihood of an acquisition appears to be in doubt.

An analyst report this week from the firm Stifel said: "... we remain skeptical a deal can be consummated at a premium to the current price given the sales and store-level profit performance." It also said Papa John's next crossroad could be a proxy contest with Schnatter. (The company's annual shareholder meeting usually happens in May.)

Last month, Schnatter won one round of his legal battle to gain access to documents concerning his ouster as company chairman when a judge ruled that Papa John's should allow its founder to review the records, although certain limitations are allowed.

Representatives for Papa John's and Schnatter declined to comment.

As of early Friday afternoon, Papa John's stock price had dropped roughly 8 percent to $38.77, compared to $42.29 at its previous close, according to Nasdaq.

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Morgan Watkins: 502-582-4502; mwatkins@courierjournal.com; Twitter: @morganwatkins26. Support strong local journalism by subscribing today: courier-journal.com/morganw.

This article originally appeared on Louisville Courier Journal: Papa John's wants to sell equity stake in the company, report says