The Battle for Cracker Barrel Is Hotter Than a Sizzling Skillet

After a scathing letter sent on Christmas Eve, Cracker Barrel lets the public know that it will not give in to the demands of a corporate takeover investor.

Jan 4, 2014 at 1:30PM

The battle over Cracker Barrel (NASDAQ:CBRL) continues to heat up like an Old Timer's Breakfast on a cast iron skillet.

Sign
Image Source: Flickr/ Wei Tchou.

On December 30th, Cracker Barrel's board of directors fired back at the corporate takeover experts at Biglari Holdings (NYSE:BH). Sardar Biglari, the Chairman of Biglari Holdings, sent a letter to the board on Christmas Eve letting them know that his company would begin the process to buy Cracker Barrel outright after various proposals had failed to win support from both the Board of Directors and current shareholders.

The battle begins
Biglari Holdings now has a 20% ownership stake in the popular restaurant chain, worth almost $500 million, after two and a half years of aggressively buying the stock. Biglari has pushed his agenda for various reforms at the company, from issuing a special $20 per share one-time dividend, to taking on more debt, and has also reiterated his position that he believes current management is doing very poorly.

Game

This is no longer a game. Source: Caitlin Regan

In his not-so-nice letter before Christmas, when he called for the company to be sold to new owners, he said bluntly; "We believe Cracker Barrel's assets would be far more productive under our leadership than in the hands of present leadership. Thus, we are willing to purchase the business because we perceive a significant upside under our management." 

He criticized the chain for its ability to run its business in a way that drove the most value to shareholders, saying "[w]e firmly believe that neither you nor your management has a deep understanding of how substantial value can be created." And he also highlighted the company's recent missteps surrounding its Duck Dynasty merchandise as "another example of poor judgment."

Cracker Barrel fires back
Yet Cracker Barrel did not sit idly as Biglari took another shot at management; it issued its own statement where it announced it would not give in to his demands.

The press release noted that while Cracker Barrel had considered Biglari's demands, it continues to believe that it is in fact currently operating down "the proper course of action for the long-term best interests of the Company and its shareholders." 

Biscuits

Source: Sarah Ackerman.

The chairman of Cracker Barrel, James Bradford, reiterated the position the company is taking in not following Biglari, and even highlighted past defeats as further evidence as to why it will not give in to the proposal. He said, "We are disappointed that Mr. Biglari is seeking to call a special meeting to vote on a proposal requesting that the Company commence a sale process, particularly in light of his defeat by substantial margins in three consecutive proxy contests."

There is no denying this battle is likely a long way from over -- but since Tennessee law prohibits some of the actions that Biglari is attempting to undertake, Cracker Barrel seemingly has the upper hand. Only time will tell who the final victor is, but clearly these two sides have dug in, and this may be a battle that continues for years to come.

Investing for the long run
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers