Papa John’s Pizza founder John Schnatter engaged in merger talks with fast-food chain Wendy’s before he stepped down as company chairman, according to a report Wednesday.
The Wall Street Journal reported the merger talks were “preliminary” and have cooled since Schnatter resigned after a report surfaced that he used a racial slur during a May conference call with marketing firm Laundry Service. Papa John’s board of directors was aware of the discussions, the report said.
"We can't comment on market rumors or speculation," Papa John's said in a statement.
A Wendy's representative said the chain does not "comment on rumors or speculation."
Papa John’s shares spiked on the news and were up more than 4% as of early Wednesday afternoon. Wendy's shares rose nearly 2%.
|WEN||THE WENDY'S CO.||22.41||+0.32||+1.45%|
|PZZA||PAPA JOHN'S INTERNATIONAL, INC.||122.79||+0.26||+0.21%|
Papa John’s has contended with sagging sales in recent quarters amid tough competition from rivals Domino’s and Pizza Hut, which have emphasized digital efforts to reach customers. Schnatter resigned as Papa John’s CEO last January, weeks after he blamed the sales slump on the chain’s association with the NFL during player national anthem protests.
Shortly after his resignation, Schnatter said in a letter to the board that his decision to step down was a “mistake” and argued that the board should have investigated the incident before pressuring him to quit. Schnatter’s attorney reportedly argued that the board does not have the authority to oust Schnatter without a shareholder vote.
Schnatter owns about 30% of Papa John’s.