Cracker Barrel adopts a new 'poison pill'

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Associated Press

Posted on April 10, 2012 at 7:01 AM

LEBANON, Tenn. (AP) — Cracker Barrel Old Country Store Inc. has adopted a new shareholder rights plan, or "poison pill," in an attempt to ward off investment firm Bigliari Holdings Inc. from acquiring a controlling stake in the restaurant chain.

Biglari Holdings, which owns the Steak 'n Shake and Western Sizzlin restaurant chains, currently owns a more than 16 percent stake in Cracker Barrel. Bigliari had gotten approval in September to buy up to about 50 percent of its stock.

"The shareholder rights plan is designed to assure that all of Cracker Barrel's shareholders receive fair and equal treatment in the event of any proposed takeover of the company and to guard against any attempt to gain control of Cracker Barrel without paying all shareholders a premium for that control," President and CEO Sandra Cochran said Tuesday in a statement.

San Antonio-based Biglari began buying Cracker Barrel shares in June 2011. In December, its chairman and CEO, Sardar Biglari, tried to join Cracker Barrel's board, but was defeated in an election at the annual shareholders meeting.

Biglari Holdings has complained that Cracker Barrel isn't living up to its potential. It also has said that the restaurant chain, which also operates retail stores that sell a variety of items including gifts and souvenirs, should provide more detailed disclosures about its individual business units and that the directors should invest more of their own money in the company.

Cracker Barrel said that it adopted a shareholder rights plan with a 10 percent triggering threshold in September, but that it expired after shareholders voted against the plan at its 2011 annual meeting.

It said the new shareholder rights plan has a 20 percent triggering threshold and does not apply to all-cash, fully financed tender offers open for at least 60 business days.

Under the new plan, if a person or group buys 20 percent or more of Cracker Barrel's outstanding stock, each right will allow its holder to buy, for $200, a certain amount Cracker Barrel's stock having a market value of twice such price. Once the 20 percent threshold is crossed, Cracker Barrel's board would also be allowed to exchange one Cracker Barrel share for each outstanding right.

Cracker Barrel said that the shareholder rights plan is effective immediately and will expire on April 9, 2015, if approved by shareholders. The plan will end if it is not approved by shareholders at the Lebanon, Tenn., company's annual meeting.

Its shares finished at $55.43 on Monday. They have traded in a 52-week range of $37.31 to $59.90.

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