Biglari Holdings Inc (NYSE:BH) is facing new resistance from Cracker Barrel (NYSE:CBRL) as the proxy battle at that company continues. The board has decided to implement a 20% poison pill in order to make it less appealing to investors including Biglari who is seeking greater control of the company. Biglari wants at least one position on the board and has been adding to his stock in the company.
He now holds 16% of the shares. Last year Biglari owned 9.9% of the the company but was rejected in his petition to gain a seat on the board. At the same meeting the shareholders in December of Cracker Barrel rejected a 10% poison pill which had been implemented by the board.
The new poison pill trigger will come into effect if any shareholder gains a 20% stake in the company a move obviously aimed at Biglari, the company’s largest owner. At 16% he will be prevented from increasing his share at least until the shareholder’s meeting where voters will have a chance to overturn the measure. If the shareholders do uphold the measure at their annual meeting it will be in effect for three years meaning Biglari will have to refrain from purrhases until April 2015.
If the measure is overturned again Biglari will once more have the opportunity to increase his holdings and with the close to 20% he might hold by the time of the meeting should be in a better position for a place on the board this time around
The move comes as Biglari is increasingly vocal about the company’s performance which he believes is an underachievement. Biglari is known for his ambitions to turn Biglari holdings into a Berkshire Hathaway Inc. (BRK.A) (BRK.B) for the new millennium.
The parallels between Biglari and Warren Buffett are at least cosmetically interesting. Both men share the same birthday and the initials for both of their companies are the same.
He is a follower of Buffett’s style in some regards, buying undervalued companies and building them to where they should be though Biglari tends to take a more activist role than Buffett in dealing with boards. Though the company is a minnow compared to Buffett’s Behemoth, Biglari Holdings results have been good so far. Time will tell whether Biglari has what it takes.
Cracker Barrel is a restaurant chain based in Tennessee. The company reported an 11% fall in net income in the second quarter of this year but increased its projections of earnings per share for the year to $4.35 up from $4.20. The proxy battle rage on and the next big moves will be at the annual meeting of shareholders late next Winter.
