Papa John’s International Inc. founder and recently ousted Chairman John Schnatter held talks to merge the pizza company with Wendy’s Co., people familiar with the matter said.

The talks between Wendy’s officials and Mr. Schnatter, who still sits on the board and owns 29% of Papa John’s, were preliminary and began before he stepped down as chairman last week over the use of a racial slur, the people said. The talks, which Papa John’s board was aware of, have cooled since the incident, one of the people said.

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