1851

This summer&rsquo;s most bizarre story in franchising keeps getting weirder.

John Schnatter, who <a href="https://1851franchise.com/john-schnatter-says-resignation-was-a-mistake-2707189" target="_blank">last week said he regrets his decision to resign</a> from the pizza chain he founded after the <a href="https://www.nytimes.com/2018/07/11/business/papa-johns-racial-slur.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=papa-johns-may-dilute-stock-to-prevent-john-schnatter-from-regaining-control-2707276" target="_blank" rel="nofollow" target="_blank">revelation that the former CEO had used a racial slur</a> in a conference call with investors in May, is not going away without a fight.

As <a href="https://money.cnn.com/2018/07/23/news/companies/papa-johns-stockholder-rights-plan/index.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=papa-johns-may-dilute-stock-to-prevent-john-schnatter-from-regaining-control-2707276" target="_blank" rel="nofollow" target="_blank">CNN Money reports</a>, Schnatter and his associates still own 30 percent of the company&rsquo;s stock, and the franchise is determined to prevent him from increasing his stake.

To head off that eventuality, Papa John&rsquo;s board of directors has approved a so-called poison pill provision, which would prevent any outside party, including Schnatter and his associates, from buying a controlling stake in the open market.

The poison pill will take effect if Schnatter and his associates increase their stake to 31 percent or if anyone else acquires 15 percent of the company&rsquo;s common stock (PZZA). Either event would trigger a severe discount in the price of the company&rsquo;s stock, allowing stockholders to purchase bulk shares and dilute control of Schnatter or anyone else increasing their stake.

Schnatter&nbsp;has not&nbsp;said whether he plans to increase his stock and trigger the poison pill provision, but this story seems increasingly unlikely to wrap up anytime soon.

Papa John’s May Dilute Stock to Prevent John Schnatter from Regaining Control

1851 Franchise

The pizza chain’s “poison pill” provision will reduce the price of stock if the former CEO increases his stake

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Papa John’s May Dilute Stock to Prevent John Schnatter from Regaining Control

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