Sardar Biglari's quest to change the strategic direction of Cracker Barrel Old Country Store is turning into a case study of diminishing returns. At the recent special shareholders' meeting called by the 20 percent investor, his push to have the board consider "immediately pursue all potential extraordinary transactions" received barely a million votes from shareholders not named Biglari.
Here's how the votes have trended over the past three and a half years:
December 2011 board seat – 6.6 million total and 4.3 million without Biglari stake
November 2012 board seat – 5.6 million total and 1.5 million
November 2013 board seat – 5.9 million total and 1.2 million
April 2014 sale motion – 5.8 million total and 1.0 million
With less than five weeks until Cracker Barrel Old Country Store shareholders vote on whether to put the company up for sale per the wishes of 20 percent owner Sardar Biglari, the company is mailing its official proxy statements. And no, the board hasn't changed its mind.
Given Biglari’s repeated prior statements to the contrary, we believe that we have no choice but to question both the genuineness of, and the motivation for, Biglari’s claim that it is now interested in acquiring the Company, and the request that the Company spend time and money to try to effect a change in Tennessee law. We also note that there appears to be no evidence to suggest that Biglari has taken any steps of its own to seek an amendment to Tennessee law which, given the Tennessee legislature’s schedule, we believe would now be too late to pursue until 2015 at the earliest.
If you were planning to head to Lebanon in April to attend the special Cracker Barrel Old Country Store shareholders' meeting, your travel plans have just changed. The restaurant and retail chain will host the gathering — where investors will have their say on activist investor Sardar Biglari's motion to put the company up for sale — at the Washington, D.C., office of law firm Bass Berry & Sims. In a newly filed preliminary proxy statement for that meeting, company executives also repeat their opposition to Biglari's moves, saying they "may be motivated by the self-interest of Biglari Capital in seeking to achieve full liquidity of this investment through a single extraordinary transaction, rather than trying to sell the shares in the open market, which may be subject to limitations under the federal securities laws."