IBJNews

Biglari agrees to antitrust fine in Cracker Barrel deal

Back to TopCommentsE-mailPrintBookmark and Share

Biglari Holdings Inc., a chain-restaurant operator that owns Indianapolis-based Steak n Shake, has agreed to pay $850,000 to settle procedural antitrust violations stemming from its purchase of shares in Cracker Barrel Old Country Store Inc.

U.S. antitrust regulators alleged Biglari violated pre-merger reporting laws in connection with its 2011 acquisition of a stake in the Lebanon, Tenn.-based restaurant and gift shop operator. Businesses run by San Antonio-based Biglari Holdings also include the Western Sizzlin restaurant chains.

Under reporting requirements for mergers, companies must notify antitrust regulators about transactions exceeding $68.2 million. The law, the Hart-Scott-Rodino Antitrust Improvements Act, contains an exemption for acquisitions made solely for investment purposes.

“Biglari improperly failed to report the transaction to U.S. antitrust authorities by claiming the purchases were a ‘passive’ investment when, in reality, Biglari intended to become actively involved in the management of Cracker Barrel,” the U.S. Federal Trade Commission said in an e-mailed statement.

The complaint for civil penalties was filed by the Justice Department because the FTC doesn’t have the authority to fine.

In a statement, San Antonio, Texas-based Biglari disputed the FTC’s claims, saying that the company filed for Hart-Scott-Rodino approval in August 2011.

“The comments made by the FTC mischaracterize Biglari Holdings’ investment intent,” according to the statement. “Biglari Holdings has made clear in all of its public filings that it has no intention of becoming actively involved in day-to-day management or in seeking control of the board of Cracker Barrel.”

Biglari Holdings had acquired almost 9 percent of Cracker Barrel’s outstanding voting shares by June 2011, according to the complaint. Biglari Holdings continued to acquire shares through June 13, exceeding the threshold for antitrust filings, which was $66 million at the time.

Cracker Barrel, which has about 620 locations, has been fighting off attempts from Biglari to gain a seat on the dining chain’s board of directors and push for management and strategy changes. Earlier this month, Cracker Barrel said that Biglari Holdings rejected its offer to appoint two independent directors.

Biglari Holdings will nominate Chairman Sardar Biglari and the company’s vice chairman, Philip L. Cooley, for Cracker Barrel’s board at the company’s annual meeting Nov. 15. If a proxy contest ensues, “our business could be adversely affected,” Cracker Barrel said today in a company filing.

‘Our Concerns’

“Our concerns about Mr. Biglari’s intentions are underscored by the finding that Biglari Holdings violated the Hart-Scott-Rodino act in connection with its acquisition of cracker barrel stock,” a Cracker Barrel spokesman said in an e- mail.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

ADVERTISEMENT