Papa John’s Strikes Deal With Starboard to Eliminate Preferred Shares


By Micah Maidenberg

Papa John’s International Inc. and Starboard Value LP are restructuring their relationship.

The pizza chain said Wednesday it would purchase 31% of the preferred shares in the company controlled by Starboard, stock the investor was granted in 2019 when it made a $250 million investment in the company.

As part of that transaction, Starboard Value will convert the rest of its preferred shares into common stock, creating 3.5 million of the latter type. The pizza company said it would pay $183.9 million for the buyback and record a charge attributable to common shareholders of roughly $110 million, or $3 a share, in its fiscal second quarter tied to the deal.

By buying 31% of the preferred stock owned by Starboard and because the investor will convert its remaining preferred shares, the 3.6% annual dividend the preferred stock carried will be eliminated, taking out an expense that affects profitability.

“We are now able to use our strong financial position to simplify and optimize our capital structure,” Papa John’s Chief Executive Rob Lynch said.

Starboard will own 9.5% of common shares in Papa John’s following the transaction and Chief Executive Jeff Smith will remain chairman of its board.

Write to Micah Maidenberg at micah.maidenberg@wsj.com


View more information: https://www.marketwatch.com/story/papa-john-s-strikes-deal-with-starboard-to-eliminate-preferred-shares-271620818969

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