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Earlier this week, Cracker Barrel Old Country Store (NASDAQ: CBRL ) offered to buy back Biglari Holdings' (NYSE: BH ) 4,737,794-share stake in the restaurant chain "at market price," characterizing its proposal as giving Biglari "an efficient exit" from its stake in the company, and saying it also wishes to avoid having to fight a third consecutive proxy battle against Biglari's attempts to win a seat on its board. Over the past two years, Biglari's eponymous CEO, Sardar Biglari, has twice tried to win election to Cracker Barrel's Board of Directors and has twice been voted down.
Cracker Barrel gave Biglari until Feb. 20 to respond to its offer, but the response came much sooner than that. On Friday, Cracker Barrel confirmed that it has already received Biglari's official rejection.
The 4.7 million Cracker Barrel shares owned by Biglari Holdings currently amount to a 20% stake in the company and are worth $316 million at market price. Cracker Barrel, with $119 million in cash and equivalents, and $554 million in debt, would need to issue more debt or float additional shares to fund a buyback, in the event that Biglari Holdings reconsiders its decision.
Shares of both companies responded well to Friday's news, rising in excess of 2.1% to close at $375.79 (Biglari) and $66.71 (Cracker Barrel), respectively.