Feb. 4 (UPI) -- After months of attempting to recover from fallout involving its owner, the Papa John's pizza chain received a $200 million boost Monday.
Activist investor Starboard Value announced it was buying the substantial stake in the franchise. Shares of Papa John's rose early Monday on the news.
The chain also said it appointed Starboard CEO Jeffrey Smith as chairman of its board of directors. Papa John's CEO and President Steve Ritchie has also been appointed to the board, which now has nine members, seven of whom are independent.
Starboard has the option to invest another $50 million by March 29.
Papa John's has been under fire since founder John Schnatter stepped down as CEO last July after making racially insensitive comments at a conference. He later said the remarks were taken out of context and he was provoked. He's still on the board of directors and owns a 31 percent stake.
Starboard's investment is a vote of confidence in the brand as it goes through a "difficult transition," Smith said. Proceeds from the investment will pay off debt and invest in new technology, branding and products.
"We see tremendous potential for the company both in the U.S. and internationally," Smith said.
"This transaction provides the company with financial resources and strong and experienced directors on the board in order to position the company for success over the long term," said former chairwoman Olivia Kirtley.
Shares of Papa John's are down 37 percent over the last 12 months. By contrast, shares of rival Domino's are up nearly 30 percent over that time.