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Cracker Barrel concedes to Biglari request

Jared Felkins jfelkins@lebanondemocrat.com • Updated Jan 22, 2014 at 10:06 AM

Cracker Barrel Old Country Store Inc. on Tuesday responded to its largest shareholder Sardar Biglari’s latest attempts to gain control of the Lebanon-based company by giving in to a request for a special shareholders’ meeting.

Last week, Biglari sent a statement to shareholders asking for a vote on whether the company should be sold. The statement asked shareholders to fill out and return a request card calling for a special shareholders meeting so a vote could be taken on whether to sell Cracker Barrel.

Cracker Barrel’s response Tuesday was for its board of directors to call for the special meeting, which will be April 23.  

“The company recognizes that Mr. Biglari will likely be able to meet the 20 percent threshold required to call a special meeting as a result of the fact that he controls the vote of 19.9 percent of the company's common stock,” Cracker Barrel said in a statement. “Accordingly, Cracker Barrel's Board has determined to call a special meeting voluntarily to avoid the added cost and distraction of Mr. Biglari's solicitation of the company's shareholders for the call of a special meeting.”

But Cracker Barrel’s statement provided plenty of criticism toward Biglari in recounting past dealings with him.

“Sardar Biglari has run proxy contests to elect himself to Cracker Barrel's board of directors at each of the company's last three annual meetings. He lost all three, by wide and increasing margins,” the statement said. “Shortly before the last annual meeting, Mr. Biglari, having missed the company's deadline for submitting shareholder proposals, threatened to call a special meeting of shareholders right after the annual meeting to vote on a proposal calling on the company to pay a $20 per share special dividend. To avoid the cost and distraction of a special meeting right after the annual meeting, the company voluntarily put Mr. Biglari's proposal on the annual meeting ballot. The proposal also lost by a wide margin.

“Apparently not satisfied with these losses, a month after the annual meeting Mr. Biglari announced his intent to call a special meeting to vote on yet another proposal, this time calling on the company to ‘pursue all potential extraordinary transactions, including the sale of the company.’ This special meeting would impose the same kind of cost and distraction that the Company sought to avoid when it voluntarily put Mr. Biglari's special dividend proposal on the annual meeting ballot. It is hard to avoid the conclusion that Mr. Biglari is now just engaged in harassment of the company.”

Last week in an SEC filing, Biglari outlined his plans to call a special meeting himself regarding a shareholders’ vote on whether Cracker Barrel should be sold.

“Section 6.2 of Cracker Barrel’s amended and restated bylaws provides that a special meeting of the company’s shareholders shall be called by the chief executive officer, the president or the secretary of the company at the written request of any person or persons holding of record not less than 20 percent of all the votes entitled to be cast on any issue contemplated to be considered at such proposed special meeting,” Biglari’s statement said. “As of the close of business on Jan. 16, Biglari collectively beneficially owned, and had the right to vote, 4,737,794 shares of the common stock, representing approximately 19.9 percent of the outstanding common stock of the company.”

In the statement, Biglari asks shareholders to support the sale of Cracker Barrel and take any necessary action to amend the Tennessee Business Corporation Act to permit Biglari to buy it.

At its annual shareholders’ meeting in November, Cracker Barrel shareholders voted overwhelmingly to reject Biglari and Philip L. Cooley’s bids to be placed on the company’s board of directors. Shareholders also rejected Biglari’s proposal that Cracker Barrel declare a special cash dividend of $20 per share, at a cost of about $476 million. Biglari suggested Cracker Barrel pay for the dividend by nearly doubling its current debt.

Cracker Barrel offered to buy Biglari’s stake for $300 million in February 2013, but he refused.

Cracker Barrel was established in 1969 in Lebanon and operates 625 company-owned locations in 42 states. 

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