Wendy’s had preliminary merger talks with Papa John’s before the company’s founder, John Schnatter, stepped down as chairman last week, a source familiar with the situation told CNBC.
The talks cooled after Schnatter’s use of a racially charged slur led to his resignation. Schnatter still sits on Papa John’s board and has a nearly 30 percent stake in the company.
Shares of the pizza company jumped after the Wall Street Journal first reported news of the talks, and ended the day up 4 percent at $53.60.