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The Deal: Biglari Plans Offer for Cracker Barrel

NEW YORK (The Deal) -- If you want something done right, do it yourself.

At least that is what it appears Sardar Biglari is saying to Cracker Barrel Old Country Store (CBRL).

The activist investor said in a Tuesday, Dec. 24, regulatory filing that he is considering making a bid for the Lebanon, Tenn.-based casual dining chain if its board does not initiate an auction process.

Biglari said that he is working with an investment bank to arrange financing in order to complete a deal.

However, Biglari, whose investment firm Biglari Capital (a subsidiary of Biglari Holdings (BH)) has a nearly 20% holding in Cracker Barrel, faces at least one hurdle that is preventing him from making a buyout bid. According to his letter, Tennessee law restricts him from bidding on the company because of the size of his stake, so Biglari wants the board to back him in seeking an amendment to the law that will allow him to move forward with a bid.

"We believe Cracker Barrel's assets would be far more productive under our leadership than in the hands of present leadership," Biglari wrote in his letter. "We are willing to purchase the business because we perceive a significant upside under our management."

Aside from a sale, Biglari is also calling for Cracker Barrel to do a share repurchase. He is not ruling out selling his stake either because he has no confidence in Cracker Barrel's current management led by CEO Sandra Cochran. Biglari also threatened to call for a special shareholders meeting if Cracker Barrel does not meet his demands.

One decision that Biglari took issue with was Cracker Barrel pulling "Duck Dynasty" merchandise off its shelves in light of the controversial comments made by one of the A&E show's actors. Cracker Barrel has since reversed its decision.

Biglari hasn't had much luck so far getting Cracker Barrel to comply with his demands. For the past three years, Cracker Barrel shareholders have voted against appointing Biglari's nominees to its board. Shareholders also voted against paying out a $20 per share dividend that Biglari demanded as well.

Earlier this month, Biglari urged Cracker Barrel to immediately begin a sale process, according to a regulatory filing.

Even if Cracker Barrel does decide to put itself on the auction block, industry sources have said they do not see any buyer paying a premium to its stock price, which is up almost 70% this year.

Cracker Barrel owns more than 600 restaurants. The company did not immediately return a call seeking comment.

-- Written by Demitri Diakantonis

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