According to CNBC, the company’s shares have fallen by almost 45 percent over the last year. In July, John Schnatter, the company’s founder and former CEO, officially resigned his position as chairman of the board. The news came hours after Schnatter acknowledged the use of a racial slur during a May conference call and offered a public apology. Media reports indicated that Schnatter was also accused of graphically describing violence against minorities.
That controversy came less than a year after Schnatter relinquished his CEO role after criticizing National Football League players for kneeling during the national anthem, blaming the outcry surrounding their protests for slowing sales growth at Papa John’s, at the time an NFL sponsor and advertiser.
Schnatter filed a lawsuit on July 27 against the company, accusing it of failing to produce documents related to his ouster. His attorneys reportedly wanted to inspect company documents “because of the unexplained and heavy-handed way in which the company has treated him since the publication of a story that falsely accused him of using a racial slur.”
While a source confirmed Papa John’s has hired Bank of America and Lazard as financial advisors, they pointed out that the company isn’t exploring a sale at this time.
“While we recognize Papa John’s attraction as an acquisition candidate given its current turmoil and turnaround potential, we believe the likelihood for some type of strategic action is low without founder John Schnatter’s approval,” Peter Saleh, analyst at BTIG, wrote in a research note last week.
Saleh added that Schnatter, who has about a 30 percent stake in the company, probably won’t want to sell or step away from the company he founded, “making the math on shareholder approval of such an action more difficult, though not impossible.”
Papa John’s, Bank of America, Lazard and Schnatter’s representatives all declined to comment.