Shares of Papa John’s (PZZA) are up nearly 20% on speculation that an investment fund backed by a member of Qatar’s royal family is considering a takeover bid for the U.S. pizza chain.
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The fund, Irth Capital Management, has reportedly been in discussions with advisors about a possible take-private offer for Papa John’s, which currently has a market capitalization of $1.69 billion. Irth Capital, has been co-founded by Sheikh Mohamed “Moe” al Thani, a member of the Qatari royal family.
The fund currently holds a 4.99% stake in Papa Johns. This stake is just under the threshold that would require it to reveal its intentions for the company in a regulatory filing. News of a potential acquisition has PZZA stock trading 20% higher on Feb. 13.
Shot in the Arm for PZZA Stock
Interest from Irth Capital comes as PZZA stock has struggled. Even with today’s big move higher, the restaurant chain’s shares are down 25% over the last 12 months, and have declined 27% through five years. Analysts blame the steady erosion to the competitive restaurant landscape in which Papa John’s competes.
For now, the takeover reports are speculative as neither Irth Capital or Papa John’s has said anything publicly about a deal. However, an acquisition would be the latest example of a well-known U.S. restaurant chain being taken over by private equity. Other restaurants gobbled up by private equity in recent years include Jersey Mike’s Subs and Dunkin’ Donuts.
Is PZZA Stock a Buy?
The stock of Papa John’s has a consensus Moderate Buy rating among 12 Wall Street analysts. That rating is based on six Buy and six Hold recommendations issued in the last three months. The average PZZA price target of $57.11 implies 10.91% upside from current levels.
