Shares of Papa John’s spiked more than 6 percent on Wednesday after a report surfaced that the company’s founder John Schnatter had been in preliminary talks with Wendy’s about a possible merger.
The talks occurred before Schnatter stepped down as chairman last week over the use of a racially charged slur, according to Dow Jones, citing people familiar with the matter. He still sits on Papa John’s board and has a nearly 30 percent stake in the company.
Both Wendy’s and Papa John’s told CNBC they do not comment on market rumors or speculation. Representatives for Schnatter declined to comment.
Schnatter’s resignation as chairman came after he confirmed that he had used the N-word during a May conference call with media agency Laundry Service.
This week he doubled down on claims he made during a television interview Friday. Schnatter alleges Laundry Service had provoked him into using the term and then tried to blackmail Papa John’s for $6 million to keep quiet about it.
Laundry Service disputed his comments in an internal memo sent to employees Tuesday, calling his claims “disparaging and outrageous.”
Los Angeles-based attorney Patricia Glaser, who’s representing Schnatter, said she asked Laundry Service for a recording of the call, if one exists.
“If there’s a tape, let’s hear it,” Glaser told CNBC. “We believe it will vindicate John, and we want to know if it exists.”
In the meantime, Papa John’s has continued to distance itself from Schnatter since, prohibiting him from talking to the press, removing him from the pizza chain’s advertising materials and revoking his office space at the company’s headquarters.
The pizza chain also retained international law firm Akin Gump Strauss Hauer & Feld to conduct an internal audit and investigation of the pizza chain’s existing policies and systems related to diversity and inclusion, supplier and vendor engagement and Papa John’s culture.
source : CNBC