The board of Papa John’s International Inc (NASDAQ:PZZA) has voted to take up a so-called “poison pill” plan in a bid to block its founder John Schnatter from gaining a controlling interest in the pizza chain.
The board has been attempting to cut ties with the controversial Schnatter in the wake of the news that he allegedly used a racial slur during a recent conference call.
Schnatter, who reportedly owns 29% of Papa John’s shares, stepped down as Papa John’s chairman this month, but has indicated he won’t relinquish his control over the company without a battle.
The move to adopt a “poison pill” defense marks an immediate attempt by Papa John’s, which is based in Louisville, Kentucky, to part ways with Schnatter, who is still a company director and set up the pizzeria over 30 years ago.
So-called shareholder right plans, which are known in investor argot as “poison pills,” are adopted to thwart investors from taking a majority stake in the company.
“The adoption of the Rights plan is intended to enable all Papa John’s stockholders to realize the full potential value of their investment in the company and to protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Papa John’s through open market accumulation or other tactics without paying an appropriate control premium,” the company said in a statement.
Papa John's shares fell 4% in pre-market trade to US$49.20.
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