Shares of Papa John's jumped 9.66 percent Monday after the company announced activist hedge fund Starboard Value is taking a $200 million stake in the company.

Papa John's also said Starboard CEO Jeffrey Smith will become its chairman. Anthony Sanfilippo, former chairman and CEO of Pinnacle Entertainment, will also join the board, as will Papa John's CEO Steve Ritchie.

Starboard is making its investment through a convertible stock purchase of 11 to 15 percent. The Wall Street Journal first reported the news.

Monday's news comes after Papa John's started a special committee to review the relationship and arrangements between the company and founder John Schnatter last year. Schnatter stepped down as CEO in December 2017 and as chairman in 2018 after a series of blunders, including using the N-word on a conference call in May. He later said the comments were taken out of context and that he was provoked into using the racial slur.

The company also sought to sell itself, but abandoned those plans after not receiving offers that met its valuation expectations.

Smith had not spoken to Schnatter but hopes to work with him, the Journal reported. Schnatter is still on Papa John's' board of directors and holds a 31 percent stake in the company.

Papa John's shares have fallen 37 percent over the past 12 months, lagging rival Domino's Pizza. Shares of Domino's are up 29.86 percent in that time period.

Click here to read the Journal's full report.