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Biglari Will Have to Settle for Cracker Barrel Crumbs

NEW YORK (TheStreet) -- Shareholder activism lives on, as evidenced by the latest chapter in the saga of Biglari Holdings (BH - Get Report) and Cracker Barrel (CBRL - Get Report).

While many were closing up shop on Christmas Eve this past Tuesday, CEO Sardar Biglari of Biglari Holdings was busy delivering yet another letter to Cracker Barrel's board of directors. After three failed attempts to gain seats on the casual dining chain's board, and after being rebuffed in his calls for Cracker Barrel to pay a somewhat large special cash dividend, Biglari's Dec. 24 letter is yet another indicator that he's not going away quietly.

CBRL ChartCBRL data by YCharts

In his latest letter, Biglari, whose company is Cracker Barrel's largest shareholder at just under 20%, is calling for the restaurant chain to "undertake a value maximization process" up to and including the sale of the company to the highest bidder. The letter goes on to state that Biglari Holdings is willing to submit a bid.

However, there is one problem with this plan, as the letter acknowledges. Cracker Barrel's home state of Tennessee prohibits Biglari Holdings from bidding for the company, due restrictions on hostile takeovers.

Biglari, however, has a solution for that minor bump in the road. The CEO has asked for the support of Cracker Barrel's board to seek an amendment to state law. When I read that portion of the letter, I knew that either Biglari is not serious about his proposal and is simply trying to make waves, or if he is serious, this is dead on arrival.

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