---
title: "Papa John’s May Dilute Stock to Prevent John Schnatter from Regaining Control"
url: https://burnaze.com/article/dcc19b34-39d8-453b-9cbb-867d842047fc
source: "1851 Franchise"
original_url: https://1851franchise.com/papa-johns-may-dilute-stock-to-prevent-john-schnatter-from-regaining-control-2707276
category: "Pizza"
industry: "Restaurants"
segment: "Pizza"
topics: ["Finance & M&A"]
published: 2018-07-26T16:11:26.000Z
modified: 2026-11-01T04:09:02.716Z
image: https://newimage.1851franchise.com/cdn-cgi/image/quality=85,format=webp,width=1280,height=720/story/featureImage/b4c82384ecc8b7d1aae8faa3d34b0eff4654.jpg
---

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

**TL;DR:** Papa John's board of directors has approved a poison pill provision to prevent John Schnatter from increasing his stake in the company. Schnatter and his associates currently own 30 percent of the company's stock.

*originally published in 1851 Franchise on 2018-07-26. [Read the original](https://1851franchise.com/papa-johns-may-dilute-stock-to-prevent-john-schnatter-from-regaining-control-2707276).*

## Story

John Schnatter, who last week said he regrets his decision to resign from the pizza chain he founded after the revelation that the former CEO had used a racial slur in a conference call with investors in May, is not going away without a fight.

As CNN Money reports, Schnatter and his associates still own 30 percent of the company’s stock, and the franchise is determined to prevent him from increasing his stake.

To head off that eventuality, Papa John’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’s common stock (PZZA). Either event would trigger a severe discount in the price of the company’s stock, allowing stockholders to purchase bulk shares and dilute control of Schnatter or anyone else increasing their stake.

Schnatter has not 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.

## Entities

- 1851 Franchise (publication)
- Restaurants (sector)
- Papa Johns (company)
- poison pill (topic)
- franchise control (topic)
- stock ownership (topic)

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Originally reported by 1851 Franchise (https://1851franchise.com/papa-johns-may-dilute-stock-to-prevent-john-schnatter-from-regaining-control-2707276). Summarized by Burnaze (https://burnaze.com/article/dcc19b34-39d8-453b-9cbb-867d842047fc).