Problem is, he has thrown BH shareholders under the bus.
I think he wants ultimate control no matter if he has to wait 2-5 more years to get it.
He may or may not do another proxy fight next year. Im kind of thinking maybe not.
I love how he lobbed the ball back in CBRLs court.
They look pretty stupid offering to spend $300 million buying back stock at $65 when they were not willing to buy it back at $40-45.
Theres no way they do a tender offer because Biglari would hold and his % would increase.
But, Im not at all happy about him doing a rights offering with BH.
He has plenty of capital now. But, this may be his way of buying discounted shares personally. He has to buy so much with his bonus money although its supposed to be open market. Im guessing they give him a pass and let him buy via the rights offering.
CBRL has 2 choices....sell the company or sit back & wait for Biglari to eventually get control.
After he gets control...wouldnt be surprised to see it merged with BH eventually.
The only way they can keep that from happening would be to minimize his stake by selling a chunk to someone else (Like a white knight) or selling the company outright.
Not sure they could find a white knight willing to buy a large stake at current prices.
So, heads, Biglari wins and tails Biglari wins.
I dont really think he cares if its sold or if he has to wait 3-5 years to get control.
from wsj: s ince Cracker Barrel has the capacity of purchasing our 20% stake, worth a little over $300 million,” Cracker Barrel should either make a tender offer for 20% of its outstanding stock or declare a special cash dividend of $300 million to its holders, Mr. Biglari said in his letter. With about $120 million of cash on hand at the beginning of November, the end of its most recently reported quarter, Cracker Barrel would need debt to fund any such moves.
By making the offer, Cracker Barrel “has told the Street that it feels more comfortable” with additional debt, said Michael Gallo, an analyst with C.L. King & Associates. Mr. Gallo told CFOJ that the exchange with Mr. Biglari “will force” Cracker Barrel to add debt to repurchase shares or pay a dividend.
He said debt to fund a $300 million capital return would put Cracker Barrel’s leverage roughly in line with its peer group and be “very supportable.” A repurchase that large would add about $1 per share to its annual earnings, but Cracker Barrel is “far more likely” to pay a special dividend if Biglari Holdings isn’t willing to sell into the tender, because Biglari’s stake would otherwise rise under a buyback.