Papa John's Founder Asks Board to Eliminate Poison Pill

(Bloomberg) -- Papa John’s International Inc. founder John Schnatter asked the pizza chain’s board to eliminate a corporate takeover defense that could stop him from taking control of the company or talking with other investors about a deal.

  • “Preventing me from discussing such matters will lead to significant loss of value for all shareholders and is in plain contravention of your duties,” Schnatter said in the letter.

Key Insights

  • Schnatter owns enough of the company to make an attractive partner for an investor who wants to team up, but the poison pill blocks him from owning more than 31 percent of the shares -- he said he currently has 30.9 percent.
  • The shareholder rights plan also has an “acting-in-concert” provision which is meant to block Schnatter from joining with other investors. It’s another obstacle in his fight with the board.
  • Schnatter said on CNBC Monday that several third parties had expressed interest in speaking with him about a potential deal.

Market Reaction

  • Papa John’s shares were up 0.2 percent to $52.53 at 12:42 p.m. in New York.
  • Papa John’s said that the board believed the shareholder plan to be in the best interest of the company and its stock owners. The plan “reduces the likelihood that any person or group gains control of Papa John’s without paying an appropriate control premium to all of the company’s stockholders,” said a company spokeswoman.

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