Papa Johns is reportedly weighing a buyout offer, again

Papa Johns is subject to more sale reports. | Photo: Shutterstock.

Is there an investment firm that hasn’t tried to buy Papa Johns at this point?

On Wednesday, the Wall Street Journal reported that Irth Capital Management, an investment fund backed by the Qatari government, has submitted an offer to take the pizza chain private. Reuters said that Irth is offering $47 a share, which is about $8 per share lower than Papa Johns’ 52-week high.

Papa Johns, as it usually does, would not comment on the report. But it is only the latest in a long, long series of rumors and media reports of potential deals to either take Papa Johns private or fold it into one of the multi-brand restaurant operators. 

Apollo Global reportedly pondered a deal for Papa Johns then pulled that deal back. Irth, meanwhile, has reportedly been targeting the chain with a potential take-private deal for more than a year. 

But deal rumors date back years. Before his infamous earnings call fiasco, Papa Johns founder John Schnatter was reportedly speaking about a combination with Wendy’s. We’ve separately heard of interest from Inspire Brands. 

And then there was the sale process the chain actually ran in 2018 in the aftermath of Schnatter’s controversy, a process that attracted a number of potential buyers but ultimately led to an investment from the investment firm Starboard Value.

Irth may be trying to buy low while betting on a comeback of the pizza sector. And it may be betting on more international growth for the chain. 

There’s no question that Papa Johns is ripe for a potential acquisition. The company is a struggling, stand-alone brand. Before Wednesday its stock had lost a third of its value over the past year. 

The pizza sector has struggled with a combination of factors. GLP-1s may be getting consumers to cut back on what they eat. Lower-income consumers are struggling and are cutting back and they represent a substantial percentage of pizza chains’ customers. Hispanic consumers in many markets are not eating out as often.

But the biggest problem is the presence of third-party delivery, which has siphoned off some of the business that was once dominated by pizza chains. That problem isn’t going away anytime soon and Papa Johns will need to better adapt its business model to that reality. 

Papa Johns isn’t the only one that could be sold. Yum Brands has put Pizza Hut on the market. 

Pizza Hut is the bigger of the two chains, with a more substantive international presence. But it has a weaker base of locations domestically, with lower unit volumes and lower overall average profitability. 

The growth potential for Papa Johns, both in the U.S. and globally, is likely why that chain appears to be the better target right now. 

Yet both chains are closing locations as they’ve lost share to rival Domino’s, which has blamed those chains’ problems on its own strength and not weakness in the pizza sector in general. 

None of these issues appear to be stopping Irth from trying to buy Papa Johns, which would clearly be betting that Domino’s is right. Assuming Irth is actually able to buy the chain, that is.All these sale rumors have yet to be followed by an actual sale, after all.