Papa John's spikes after report says the hedge fund that owns a chunk of Wendy's is looking into buying the pizza chain

  • Papa John's is surging early Tuesday following a report saying Trian Fund Management is interested in acquiring the pizza chain.

  • The activist hedge fund contacted the pizza chain "to collect information as it explores a possible bid," according to The Wall Street Journal.

Papa John's rallied early Tuesday following a report suggesting Trian Fund Management, the hedge fund that owns a stake of about 13% in Wendy's, is interested in buying the pizza chain.

According to The Wall Street Journal, the activist hedge fund contacted the pizza chain "to collect information as it explores a possible bid." Papa John's shares were up about 7% shortly after Tuesday's opening bell.

RELATED: Papa John's founder John Schnatter

In late June, Nelson Peltz, Trian's co-founder and Wendy's chairman met Papa John's founder and former CEO John Schnatter to discuss a possible deal. However, the report said there were several other bidders, including private-equity firms.

In September, there were reports about Schnatter reaching out to private-equity firms in an attempt to buy back the company he founded in 1984. It is the world's third-largest pizza delivery chain, with more than 5,000 locations in 45 countries.

Schnatter, who still owns nearly a third of the company, resigned from its board in July after admitting to making controversial comments on a company conference call in May. Since then Papa John's enacted a "poison pill" provision designed to prevent him from taking over the company by buying its stock on the open market. The plan takes effect "if a person or group (including a group of persons who are acting in concert with each other) acquires beneficial ownership of 15% or more" of the company's common stock, according to the company's press release.

Papa John's was down 6% this year through Monday.

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