(Reuters) - Starboard Value LP will make a $200 million (153 million pounds) investment in Papa John's International Inc and the activist hedge fund's chief executive officer will become the chairman of the troubled pizza chain, the company said on Monday.
Starboard's Jeffrey Smith will replace Papa John's founder John Schnatter, who resigned last July following reports that he had used a racial slur on a media training conference call.
Papa John's is locked in a battle for control with Schnatter, who owns about 30 percent of the company and still retains a seat on the company's board.
Reuters reported on Friday that Papa John's was seeking to sell a stake in itself after outright acquisition offers from private equity firms did not meet its valuation expectations.
"Our agreement with Starboard concludes a comprehensive strategic review conducted over the past five months to better position Papa John’s for growth, improve the Company’s financial performance and serve the best interests of our stakeholders," Olivia Kirtley, member of a Special Committee and most recently Chairman of the Papa John’s Board.
Shares of Papa John's rose 12 percent to $43.01 before the bell.
(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli)