Cracker Barrel Mails Definitive Proxy for Special Meeting
Urges Shareholders to Reject Biglari’s Proposal to Pursue all Potential
Extraordinary Transactions and Proposal to Take Any Action Necessary to Amend
Tennessee State Legislation
LEBANON, Tenn. -- March 21, 2014
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company")
(Nasdaq:CBRL) commenced mailing of its proxy statement for the Company's
Special Meeting of shareholders to be held on April 23, 2014. In a letter to
shareholders, Sandra B. Cochran, Cracker Barrel's President and CEO, addressed
a number of claims made by Biglari Capital.
Ms. Cochran urged shareholders to vote against the proposals brought forward
by Biglari Capital for the Board to (1) immediately pursue all potential
extraordinary transactions, including the sale of the Company, and (2) take
any action necessary to amend the Tennessee Business Corporation Act to permit
Biglari Capital to engage in an extraordinary transaction with the Company.
In the letter, Ms. Cochran stated, “The Board unanimously believes that
seeking an immediate sale of the Company, as advocated by Biglari’s proposal,
is not in the best interests of the Company’s shareholders in light of current
market conditions and the Company’s sustained strong performance.”
Commenting on the call to amend Tennessee state law, Ms. Cochran said, “…the
Board does not have the power to amend Tennessee law. In addition, the Board
believes that the interests of all shareholders are best served by the
management team continuing to focus on the execution of the Company’s current
operational and strategic plan, rather than engaging in a time-consuming and
potentially expensive lobbying effort.”
The full text of the letter follows.
Text of Letter from Ms. Cochran to Cracker Barrel Shareholders:
March 21, 2014
Dear Cracker Barrel Shareholders,
Cracker Barrel will hold a Special Meeting of its shareholders at 10:00 AM ET
on Wednesday, April 23, 2014, at 1201 Pennsylvania Avenue NW, Suite 300,
Washington, DC. The purpose of this Special Meeting is to provide our
shareholders with the opportunity to vote on two non-binding advisory
proposals put forth by Biglari Capital (“Biglari”) requesting that the Board
of Directors (the “Board”) (1) immediately pursue all potential extraordinary
transactions, including the sale of the Company, and (2) take any action
necessary to amend the Tennessee Business Corporation Act to permit Biglari
Capital to engage in an extraordinary transaction with the Company.
Under our Company’s charter and by-laws, shareholders holding 20% of the
Company’s shares can call a special meeting. Biglari holds approximately 19.9%
of the Company’s shares, and recently filed the regulatory forms necessary to
solicit other shareholders to call a special meeting. Our Board voluntarily
called the Special Meeting in order to avoid the added cost and distraction of
such a solicitation.
I urge you today to vote on the WHITE proxy card AGAINST each of the
proposals. We believe that both proposals would slow the momentum that we have
created over the past several years and are not in the best interests of the
Company or our shareholders at this time.
At each of Cracker Barrel’s last three annual meetings, Biglari has nominated
an alternative slate of candidates for election to our Board. At each of these
meetings, the Biglari nominees have been defeated by significant and
increasing margins, despite the fact that Biglari’s stake in the Company’s
common stock doubled over the same period. In addition, at the 2013 Annual
Meeting, our shareholders also voted, by a wide margin, against a non-binding
proposal publicly made by Biglari recommending that the Board approve a $20
per share special dividend. We voluntarily included that proposal on the 2013
Annual Meeting ballot—despite the fact that Biglari made the proposal well
after the deadline for submitting shareholder proposals—in order to avoid the
time and expense of a special meeting of shareholders that Biglari threatened
to call to vote on the special dividend proposal following the annual meeting.
Despite these defeats, within approximately one month following the 2013
Annual Meeting, Biglari called for the Company to “undertake a value
maximization process by reviewing all potential extraordinary transactions,
including the sale of the issuer…”. Biglari went on to say that if the Company
did not promptly commence a sale process, it intended to call a special
meeting of shareholders to vote on a non-binding proposal recommending that
the Board pursue an extraordinary transaction such as the sale of the Company.
In a letter dated December 24, 2013, to Cracker Barrel Chairman James
Bradford, Biglari continued to call for Cracker Barrel to review all potential
extraordinary transactions, including the sale of the Company. The letter also
stated that, alternatively, the Company could take on leverage and effect a
share repurchase, and that Biglari would consider selling all of its shares if
this occurred. The letter closed by stating that if the Company did not take
the recommended actions, Biglari would exercise any and all rights and
remedies at its disposal, including seeking to call a special meeting of
WE BELIEVE THAT PURSING A SALE OF THE COMPANY AT THIS TIME IS NOT IN THE BEST
INTERESTS OF SHAREHOLDERS
The Board unanimously believes that seeking an immediate sale of the Company,
as advocated by Biglari’s proposal, is not in the best interests of the
Company’s shareholders in light of current market conditions and the Company’s
sustained strong performance. Rather, the Board continues to believe that
execution of the current operational and strategic plan outlined by the
Company over the past two fiscal years—which the Board believes has been
primarily responsible for delivering the positive results to shareholders
during those years—remains the best means for promoting the long-term
interests of shareholders by maximizing value and future returns. The Board
further believes that publicly undertaking a sale process at this time would
disrupt the Company’s progress, which could damage the long-term value of the
The successful execution of our strategic and operational plan has resulted in
significant returns to our shareholders. The table below shows Cracker
Barrel’s performance compared with our peers and the overall stock market
since announcement of our strategic initiatives in September 2011.
Total Shareholder Returns
12-Sep-2011 to 12-Mar-2014
Cracker Barrel 175.2 %
S&P 500 Restaurant Index 48.8 %
S&P 600 Restaurant Index 125.2 %
S&P 1500 Restaurant Index 56.9 %
S&P 500 Index 69.9 %
Over the same time period, the Company has generated significant cash flow
from our operating business. The Board is keenly focused upon, and regularly
assesses, the available alternatives for returning capital to shareholders,
making important investments in the future growth and health of the business,
and prudently managing appropriate leverage and business risk. This has
allowed us to triple our annual dividend from $1.00 per share in November 2011
to $3.00 per share currently.
Our Board of Directors, therefore, unanimously recommends that you vote on the
WHITE proxy card AGAINST the advisory vote regarding a proposal publicly made
by Biglari Capital requesting the Board to immediately pursue all potential
extraordinary transactions, including the sale of the Company.
WE BELIEVE THAT BIGLARI’S REQUEST THAT WE LOBBY THE TENNESSEE LEGISLATURE AND
GOVERNOR IS QUESTIONABLE AND INAPPROPRIATE
We believe that Biglari’s second non-binding advisory proposal, that the Board
take “any action necessary to amend the Tennessee Business Corporation Act to
permit Biglari Capital to engage in an extraordinary transaction with the
Company,” is questionable and inappropriate. We believe the proposal is
questionable because it contradicts many statements made by Biglari, some
quite recently, in which Biglari denied any intent to acquire control of the
Company and repeatedly cited Tennessee law’s prohibition of certain business
Some of those earlier statements are as follows:
*“Biglari Holdings is not seeking to acquire control of Cracker Barrel.
Furthermore, under Tennessee law, there are strict anti-takeover laws.”
(Biglari Capital Dec. 9, 2011 Letter to the Company’s Shareholders)
*“[W]e are neither asking nor seeking board control or ownership control of
Cracker Barrel.” (Biglari Capital Oct. 8, 2012 Letter to the Board)
*“Even if we wanted to control Cracker Barrel, we could NOT because
Tennessee statutes prevent a takeover . . . .” (Biglari Capital Oct. 25,
2012 Letter to the Company’s Shareholders)
*“[W]e have been clear about our agenda: We are interested in making money,
not controlling the Company.” (Biglari Capital Oct. 23, 2013 Letter to the
Company’s Shareholders) (emphasis supplied in all quotes)
We believe that Biglari’s proposal is inappropriate because the Board does not
have the power to amend Tennessee law. In addition, the Board believes that
the interests of all shareholders are best served by the management team
continuing to focus on the execution of the Company’s current operational and
strategic plan, rather than engaging in a time-consuming and potentially
expensive lobbying effort.
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.
For all of these reasons, the Board recommends that you vote the WHITE proxy
card AGAINST the proposal requesting that the Board take any action necessary
to amend the Tennessee Business Corporation Act to permit Biglari Capital to
engage in an extraordinary transaction with the Company.
* * *
I urge you today to vote AGAINST Biglari Capital’s proposals and help preserve
the positive momentum that we have achieved through the implementation of our
current strategy. To ensure that your vote is received in time, I urge you to
vote by telephone or via the Internet by following the instructions on the
Company's WHITE card. I also urge you NOT to sign any gold proxy cards sent to
you by Biglari Capital or its affiliates.
If you have any questions or require assistance with voting your WHITE proxy
card, please call MacKenzie Partners, Inc., toll-free, at (800) 322-2885.
/s/ Sandra B. Cochran
President and Chief Executive Officer
About Cracker Barrel Old Country Store®
Cracker Barrel Old Country Store, Inc. provides a friendly home-away-from-home
in its old country stores and restaurants. Guests are cared for like family
while relaxing and enjoying real home-style food and shopping that's
surprisingly unique, genuinely fun and reminiscent of America's country
heritage…all at a fair price.
Cracker Barrel Old Country Store, Inc. (Nasdaq:CBRL) was established in 1969
in Lebanon, Tenn. and operates 626 company-owned locations in 42 states. For
more information, visit crackerbarrel.com.
Important Additional Information
Cracker Barrel, its directors and certain of its executive officers may be
deemed to be participants in the solicitation of proxies from Cracker Barrel
shareholders in connection with the matters to be considered at the special
meeting of Cracker Barrel's shareholders to be held on April 23, 2014. On
March 21, 2014, Cracker Barrel filed a definitive proxy statement (the “Proxy
Statement”) with the U.S. Securities and Exchange Commission (the "SEC") in
connection with the solicitation of proxies from Cracker Barrel shareholders.
INVESTORS AND SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT
AND ACCOMPANYING WHITE PROXY CARD AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL
CONTAIN IMPORTANT INFORMATION. Shareholders may obtain the Proxy Statement,
any amendments or supplements to the Proxy Statement and other documents filed
by Cracker Barrel with the SEC for no charge at the SEC's website at
www.sec.gov. Copies are also available at no charge at the Investor Relations
section of our corporate website at www.crackerbarrel.com.
Cracker Barrel Old Country Store, Inc.
Lawrence E. Hyatt, 615-235-4432
Andy Merrill, 212-886-9304
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