Papa John’s trying to stop Papa John from taking over Papa John’s

Photo: Wolterk (iStock Editorial / Getty Images Plus)

After Forbes reported he used a racial slur during a marketing conference call, Papa John’s founder John Schnatter gave a straightforward apology and stepped down as chair of the company’s board. What a positive move, you may have thought to yourself. What a refreshing, non-“I’m sorry if anyone was offended” statement. Looks like this guy is just going to slink off quietly into the sunset. Well, you would have been wrong.

As CNN Money reports today, Schnatter subsequently “sent a letter to the pizza chain’s board, accusing it of not “doing any investigation” when he was forced out of his chairmanship. He said its decision to remove him was based on ‘rumor and innuendo.’” [Even though he straight up admitted the statement.] He also found time to accuse the company who set up the now-infamous phone call of extorting him. Meanwhile, “Schnatter’s attorney told the board that any attempt to remove Schnatter from the board without a ‘proper vote of the shareholders will be null and void.’”

To fight back against a possible takeover by Schnatter, who, with his associates, still owns 30 percent of the company, Papa John’s board is instituting the unusual “poison pill provision.” Basically: If the company senses a takeover, it can sell stock to its shareholders at a reduced rate to help keep those shareholders in charge: “If Schnatter and his associates increase their stake to 31 percent, or if anyone else acquires 15 percent of Papa John’s (PZZA) common stock in a deal not approved by the board, stockholders would then be allowed to buy shares at a discount, diluting the control of Schnatter or anyone else trying to build up a stake.”

After the “poison pill” announcement, Papa John’s stock fell 8 percent. So it appears that so far there are no winners in this scenario.