Cracker Barrel Cracks Open Shareholder Rights Plan

Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL) decided to opt for the shareholder rights plan yesterday, after the board sensed takeover threats from company investor.

This shareholder right move or the poison pill approach along with a qualifying offer exception was adopted by the board of directors of the company while announcing dividend distribution of each preferred share acquisition for each outstanding share from the company’s common stock. The current plan still waits for the approval of all the shareholders at the2011 annual Cracker Barrel Old Country Store Inc. meeting and it will be scrapped if it is not approved. It does not apply to all cash and fully financed tender offers which are open for a minimum of 60 working days.

The Executive Chairman for Cracker Barrel Old Country Store Inc., Michael A. Woodhouse in a statement said that the move by the board was in response to the looming threat of a takeover by Biglari Holdings clearance under the Hart Scott  Rodino Act for the acquisition of about 49.99 percent of the company’s common stock allowing it to accumulate a substantial amount and in turn hold a position from which it can control Cracker Barrel Old Country Store Inc. through various market purchases which does not reflect the control premium being offered to all shareholders.

The annual shareholder meeting of Cracker Barrel Old Country Store is scheduled to be held in the month of December and the company plans to put the rights plan to a vote. Michael A. Woodhouse said that the company considers it to be very important to protect the interests of its shareholders in the near term.

The shareholders rights plan is devised in such a way to ensure that all shareholders of Cracker Barrel Old Country Store Inc. will receive an equal and fair treatment in case of any proposed takeover of the company and also to safeguard against any abusive tactics with an intention of gaining control of the company without paying the premium for all of its shareholders.

If the shareholders approve this rights plan which has been effectively implemented at present during the annual meeting, then it will be in force till 22 September 2014 and in case of the shareholders not approving the right, it will be terminated immediately. The right causes no interference to the all cash, fully financed tender offers for the shares which will remain open for at least two months.

Cracker Barrel Old Country Store, based in Lebanon, Tennessee has been in business since 1969 with 604 branches across the United States.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.