Cracker Barrel Old Country Store has begun mailing its proxy cards ahead of next month's annual shareholders' meeting, where 10 percent owner Sardar Biglari is seeking a board seat. Along with the cards is a letter from Chairman Mike Woodhouse outlining the reasons why the chain's board is resisting Biglari.
We believe that if you want to know what Mr. Biglari intends to do at Cracker Barrel, you need look no further than his track record. It is clear to us that he has sought to take control of companies without paying a premium, and then run those companies for his own benefit — not that of ALL shareholders.
As the proxy battle between Cracker Barrel Old Country Store and Sardar Biglari heats up, the Lebanon-based chain's chairman has decided it's time to circle the wagons. Mike Woodhouse on Thursday sent emails and voicemails to all field manager and home-office workers getting them up to speed and calling on them to stay focused on their daily tasks at hand.
The very best way to protect our company is to focus on the business and to deliver improved results. We must continue to focus on delivering the Cracker Barrel guest experience which, in turn, will grow restaurant traffic and retail sales.
Bloomberg has taken an in-depth look at one of the motivations behind the investment firms that are pushing for changes at a number of restaurant chains, including Cracker Barrel Old Country Store. The companies' property portfolios often are worth more than the public market value and can be sold and leased back to make a quick buck that could fund a fat dividend. Cracker Barrel activist Sardar Biglari has used that tactic before.
“Selling the real estate is an obvious way to optimize return,” Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, said in a telephone interview. The firm manages $3.7 billion, including about 465,000 Cracker Barrel shares. “Activists can be an agent of change to force the sale of these restaurants’ real estate.”
“We’ve always felt there was a lot of value” in Cracker Barrel’s property, he said.
The investment group that's been threatening a "no vote" campaign against Community Health Systems directors who are up for re-election has taken action, mailing a letter to shareholders denouncing the hospital company's respone to its — and others' — allegations about CHS' billing practices.
In the letter, available here, CtW Investment Group says CHS has dodged CtW's concerns and "made a series of assertions that are inaccurate and misleading" — which it details in the four-page correspondence. Here's one gem about CHS CEO Wayne Smith's April 29 mention of CtW's allegations:
"Mr. Smith's letter is nothing more than a blatant and offensive attempt to deflect attention from the substantive issues to which management apparently cannot compellingly refute. That board condoned such a letter says more about the board than the letter says about management's antagonistic approach to shareholders."
In other CHS news, Footnoted.org has a look at some of the court filings in Tenet Healthcare's lawsuit against CHS. It points out some less-than-cordial back-and-forth between the parties' attorneys, most of it centered on just how much information Tenet may be getting from former CHS workers. See it here.
We believe that Community Health has nominated its slate of director candidates only to advance its goal of acquiring Tenet at an inadequate price. We are confident that the continued execution of our strategic plan will deliver significantly more value to our stockholders than Community Health’s inadequate proposal. Under the Board’s leadership, Tenet has delivered strong growth for more than five years, including solid performance in fiscal year 2010. Tenet continues to expect significant growth from a combination of acute care revenues, our expanding outpatient business, offering healthcare services to other hospitals, improved cost efficiencies, expanded margins and strategic investments. We look forward to building on our momentum in the year ahead. We firmly believe that Tenet’s stockholders – not Community Health – deserve to benefit from this growth. Tenet’s Board and management team will continue to act in the best interests of all its stockholders, and remain focused on executing our core business plan and capitalizing on Tenet’s leading position in healthcare services.