Trian Fund Management has decided not to pursue an acquisition of Papa John's, the Wall Street Journal reported on Tuesday, sending shares of the pizza chain down 14 percent.
Other potential buyers are only interested in acquiring a stake of the company, said the report, which cited people familiar with the matter.
Papa John's ousted founder John Schnatter as its chairman in July after a conference call leaked in which he used a racially charged slur. Since then, the company has been embroiled in a public relations nightmare that's included a war of words and two lawsuits. That drama came as the company was already struggling to compete against more innovative competitors like Domino's.
Amid the turmoil, the restaurant has enlisted the help of Bank of America and Lazard to explore a sale that has attracted initial bids from both corporate and private equity buyers, people familiar with the process have told CNBC. Challenging earnings results, however, have made those efforts more complicated.
Papa John's last month missed Wall Street earnings forecasts after spending millions of dollars during the third quarter to repair its tarnished image following a nasty public feud with its founder. The company lost $13 million during the third quarter, compared with a profit of $21.8 million during the same period last year.
Both Trian, which also owns a 13 percent stake in Wendy's, and Papa John's declined to comment. A spokesperson for Schnatter did not immediately respond to a request for comment.
Papa John's shares are down more than 10 percent over the past year.