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Biglari Holdings Inc. Message Board

  • smaycs4 smaycs4 Sep 27, 2013 4:41 PM Flag

    When & where did BH offer to end the proxy fight ?

    San Antonio activist investor Sardar Biglari — who has pushed for changes at Cracker Barrel Old Country Store Inc. — extended an olive branch, of sorts, to the Tennessee company this week.

    Biglari offered to end a proxy fight by withdrawing his nominees for Cracker Barrel's board if the restaurant and retail chain paid a $20-a-share special dividend.
    I didnt see anything in the conference call transcript. And no 13d. What did I miss ?

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    • I found it. It was detailed in CBRLs proxy.

      BH had asked for$15 before and this time agreed to drop their nominations if the $20 is paid out.

      My guess is they were hoping that CBRL would meet him somewhere in the middle and pay out $12-15.

      Straegy wise is makes no sense for CBRL to pay out a $20 dividend if their goal is to get rid of him because he isnt going anywhere. I believe he is going to do just what he said he would which is to "outlast" the rest of the board.

      Unless the company gets sold first of course.

      It will be interesting to see how many shareholders agree with him and vote for the $20 dividend.

      Im gussing 10-15% for a total of 30-35%, which wouldnt win of course.

      • 1 Reply to smaycs4
      • I wouldn't be surprised if there's more support for the special dividend. Even if the CBRL board is arguably competent to manage their restaurants I don't think there's any reason to suppose they're better than your average Joe when it comes to capital allocation and investment decisions.

        If there's no special dividend then the cash will do one of the following:
        1: sit in a bank account (earning minimal interest)
        2: be used to open additional stores or for capital improvements on existing stores (probably resulting in a low ROI since Biglari showed the board used misleading number to exaggerate new store results last year)
        3: be used to invest in new areas unrelated to CBRL's primary business (likely to result in the same mediocre results companies that do this typically experience)

        This will ultimately come down to whether the shareholder advisory services buy into this reasoning. As long as he can get 37.5% of the remaining shareholders (after factoring out BH-owned shares) to agree with this rather rational position he will have forced the issue.

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