Papa John's Soars As Wannabe “Sovereign” Fund With No Money Tries Pulling Off A $2B Deal

Are you ready for a one of a kind rant? Well here you go, friends: Papa John’s stock ripped 18% yesterday because some Qatari royal and his private equity pet project, Irth Capital, are allegedly eyeing a takeover. The pizza chain, which has been stuck in limbo ever since John Schnatter self-immolated in the dumbest way possible, is now apparently so attractive that a fund managing just $200 million thinks it can buy out a company worth eight times that. Meaning the math here is about as believable as Papa’s apology tour after he got booted.

(Source: HuffPost) 

For more context, Irth Capital was co-founded by Sheikh Mohamed “Moe” al Thani (yes, that al Thani—Qatar’s royal family which is basically like Qatar’s version of the Kardashians) and Matthew Bradshaw, a guy whose previous claim to fame was helping take Bojangles and Casper private. One of those sells chicken and biscuits. The other sells overpriced mattresses to people who believe in the power of Instagram branding. Both deals worked out well enough that now these guys are now looking to buy a pizza empire that’s been playing third fiddle to Domino’s and Pizza Hut for years.

As of right now though,  "Moe" al Thani and Matthew Bradshaw, have been playing the stealth game for a while now, already holding a 4.99% stake in the company—conveniently just under the threshold that would force them to disclose their real intentions. That’s some real “nothing to see here” energy. 

(Source: Investing.com) 

But here’s the thing, they don’t have anywhere near the firepower to pull this off alone. Either they’re planning to leverage the living hell out of Papa John’s (classic private equity move) or Sheikh Moe is making a few calls to Qatar’s sovereign wealth fund, which happens to be sitting on $475 billion, because when you’ve got oil money, nothing is ever really off the table.

Now again, it doesn’t go without saying that Papa John’s has been an underachiever for years, getting lapped by Domino’s and Pizza Hut while pretending it still matters. The stock has been flat, the brand still carries the stench of its disgraced founder, and meanwhile, competitors have left it in the dust. But private equity loves broken toys. The playbook is simple: buy it, load it with debt, cut costs until employees are crying in the walk-in freezer, and pray that some idiot institutional investors think they’ve just discovered the next Domino’s. And if it doesn’t work? Who cares. The PE guys will have already raked in their fees and cashed out.

(Source: Yahoo Finance) 

Naturally, investors are eating this takeover rumor up because, frankly, what else are they supposed to do? Believe in a Papa John’s organic turnaround? Convince themselves that the pizza market is about to experience some kind of renaissance? No, they’re hoping for a buyout premium and an easy exit.

Which means if Irth actually makes a real offer, the stock will pump higher. If this is all just billionaire posturing, expect the hype to evaporate faster than Papa John’s dignity after Schnatter’s meltdown. Either way, watching a fund with barely enough capital to buy a mid-sized chain of laundromats seriously consider a $1.6 billion deal is the kind of absurdity that makes this market worth watching.

(Source: Giphy) 

So with that, you know the drill, keep an eye on Papa Johns as more information on this comes and place your bets accordingly. As always, stay safe and stay frosty, friends! Until next time… 

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Stocks.News does not hold positions in companies mentioned in the article.