Biglari raises stake in Cracker Barrel


Biglari Holdings Inc. has increased its aggregate stock stake in Cracker Barrel Old Country Store Inc. just weeks after Biglari chief executive Sardar Biglari lost a proxy fight for a seat on the Cracker Barrel board.

In a filing with federal securities regulators posted Friday, Biglari Holdings and affiliates disclosed that they had increased their combined ownership stake in Cracker Barrel from just below 10 percent prior to the proxy vote, to 11.8 percent as of Jan. 4.

Although Biglari did not prevail in a board-seat vote at Cracker Barrel’s Dec. 20 shareholder meeting, a majority of Cracker Barrel investors agreed with his proxy campaign position that Cracker Barrel management should rescind a “shareholders rights” measure. That so-called poison pill was triggered when an investor’s stake reached 10 percent.

San Antonio-based Biglari Holdings is the parent company of the Steak ’n Shake and Western Sizzlin restaurant chains, as well as other finance businesses.

The shareholders’ rights plan was created in September by Cracker Barrel, and was established to block investors from garnering more than a 10-percent stake in the company without allowing shareholders an opportunity to buy more stock at a reduced price. Management of Lebanon, Tenn.-based Cracker Barrel had described the plan as “intended to protect [shareholders] from abusive takeover tactics that would not treat all shareholders fairly.”

Biglari had said the measure would only help entrench current management and “would have a negative effect on share price” by putting up barriers that limit demand and by diluting the stock.
In filings with securities regulators and in public comments near the end of the proxy battle, Biglari maintained his position that Cracker Barrel is not performing to its fullest potential and by keeping him off the board, Cracker Barrel management has opted to “attack me, not my ideas.”

In its last letters to shareholders, Cracker Barrel management continued to contend that electing Biglari to the board would prove disruptive to a multi-prong improvement initiative by the company that operates 606 family-dining restaurants.

In one of the letters, Sandra B. Cochran, Cracker Barrel president and chief executive, also noted that two proxy advisory services — Egan-Jones Ratings Co. and Institutional Shareholder Services — recommend that stockholders vote for all the board nominees put forth by the company and not for Biglari. Glass Lewis & Co., another proxy advisory firm, has recommended shareholders vote for Biglari’s proxy.

Contact Alan J. Liddle at
Follow him on Twitter: @AJ_NRN