Cracker Barrel has rebuffed recent attempts by the company's largest investor to force a sale of the Lebanon-based restaurant company.
In a statement released Monday, the company said the board of directors considered Sardar Biglari's recent demands that Cracker Barrel Old Country Store Inc. officials start looking for a buyer, including the possibility of Biglari making a bid himself.
"We are disappointed that Mr. Biglari is seeking to call a special meeting to vote on a proposal requesting that the company commence a sale process, particularly in light of his defeat by substantial margins in three consecutive proxy contests." said James Bradford, chairman of the board at Cracker Barrel. "Cracker Barrel's board of directors continues to believe that the execution of management's existing business strategy will create the most value for all shareholders. The board regularly evaluates all options to serve the best interests of the company and its shareholders and will continue to do so."
On Christmas Eve, Biglari sent a letter asking company officials to find a buyer, saying he is willing to buy it himself. However, under Tennessee law, Biglari — who owns nearly 20 percent of the company's shares — is prohibited from making a bid. He encouraged company officials to help him work with the state legislature to get the law changed in early 2014.
Biglari argued that current management is not creating enough value for shareholders.
"We think Cracker Barrel's earning power is far too low in your hands. Current management appears relatively successful because of the dismal performance under the former CEO," the letter said.
Biglari has been rebuffed in his past three attempts to gain seats on the Cracker Barrel board for himself and associate Philip Cooley, yet he has only hinted that he might exit his position in the Lebanon, Tenn.-based restaurant/retail chain.
He holds the shares through entities that he controls, including the San Antonio-based Biglari Capital Corp., The Lion Fund II LP and Steak 'n Shake Operations Inc., which are all under the umbrella of Biglari Holdings Inc., of which he is CEO.
Biglari has spent much of 2013 trying to profit off the company's stock surge.
The stock price is up about 250 percent since he began buying shares in 2011. Shares of Cracker Barrel lost $1.06 to $110.20 on Monday, but remains far above the 52-week low of $62.71.
Cracker Barrel offered to buy Biglari's stake for $300 million in February, but he refused.
Now, Biglari said an alternative to selling the company would be to begin a massive share repurchase by Cracker Barrel. He said he would now be willing to take part in that program.
"If you are confident in your ability, then, alternatively, you should take on leverage and do a share repurchase," the letter said. "We would consider selling our entire position because we would not want to leave our money in your care."