Qatari Fund Cooks Up a Premium Papa Johns Bid

Funds could soon be fighting over the last slice of Papa Johns pizza after a fresh bid reportedly emerged valuing the garlic dip hub at $1.5 billion. Papa Johns CEO Todd Penegor said on Thursday that he wouldn’t comment on “market speculation.” 

Irth Capital, a global investment fund backed by the Qatari royal family, renewed its bid to take the pizza company private, The Wall Street Journal reported yesterday. The fund tried to buy the pizza chain alongside Apollo Global Management last year. Despite that deal falling apart, Irth has since upped its share of the company’s stock to 10%. 

Papa Johns’ stock surged 19% Wednesday as investors anticipated the potential buyout. Irth’s offer to take the pizza chain private puts a ~50% premium on the company’s shares at $47 apiece.

Losing Dough

Papa Johns went public in 1993 and saw its share price peak at over $140 in 2021, as quarantined homebodies ordered pizza delivery. It has fallen more than 70% in the years since. The company struggled with weak demand, a problem that wasn’t remedied by the string of CEOs who took the helm after its namesake founder left in 2018. (“Papa” John Schnatter stepped down after he used a racial slur in a conference call.) 

At the same time, the pizza chain can’t keep its crust from sagging in the marketplace:

• Domino’s Pizza increasingly dominates pizza delivery. The CEO of Domino’s, Russell Weiner, said last month that the pizza chain has eaten up 1% of market share per year for the past 11 years.  
• While Domino’s has continued to grow, Papa Johns and Pizza Hut have both seen sales fall for the last two years. Papa Johns said last month it’ll close more than 300 stores by the end of next year, and Pizza Hut said it’ll close 250 this year. 

Food Fight: Other suitors could emerge to bid on Papa Johns. Pizza Hut may also be up for grabs soon, with parent Yum! Brands saying last year it was exploring options for the struggling chain. Despite the pizza chains losing customers to Domino’s and its Stuffed Cheesy Bread, both have brand clout and have built delivery networks that could appeal to funds looking to get a slice of the industry.