Cracker Barrel Adopts Shareholder Rights Plan with Qualifying Offer Exception


Cracker Barrel Adopts Shareholder Rights Plan with Qualifying Offer ExceptionThe Board of Directors of Cracker Barrel Old Country Store, Inc. yesterday adopted a shareholder rights plan with a qualifying offer exception and declared a dividend distribution of one preferred share purchase right on each outstanding share of Cracker Barrel common stock. The plan will terminate unless approved by shareholders at the company’s upcoming 2011 annual meeting and does not apply to all-cash, fully financed tender offers open for at least 60 business days.

Michael A. Woodhouse, Executive Chairman of Cracker Barrel Old Country Store, Inc., stated, “The Board’s action is in response to Biglari Holdings’ clearance under the Hart-Scott-Rodino Act to acquire up to 49.99% of Cracker Barrel’s common stock, and the resulting threat that Biglari Holdings could accumulate a substantial, and potentially controlling, position in Cracker Barrel through market purchases that do not reflect a control premium offered to all shareholders. We intend to put this rights plan to a vote of our shareholders at our December shareholder meeting and believe it is important to protect the interests of our shareholders in the near-term.

“The shareholder rights plan is designed to assure that all of Cracker Barrel’s shareholders receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against abusive tactics to gain control of Cracker Barrel without paying all shareholders a premium for that control.”

The rights would not interfere with all-cash, fully financed tender offers for all shares that remain open for a minimum of 60 business days (“qualifying offers”).

The rights plan is effective immediately and, if approved by shareholders, will expire on September 22, 2014. If shareholders do not approve the rights plan, it will expire immediately following the 2011 annual shareholders’ meeting.

If a person or group acquires 10% or more of Cracker Barrel’s outstanding common stock, each right will entitle its holder (other than such person or members of such group) to purchase, for $200, a number of Cracker Barrel’s common shares having a market value of twice such price. In addition, at any time after a person or group acquires 10% or more of Cracker Barrel’s outstanding common stock (unless such person or group acquires 50% or more), Cracker Barrel’s Board of Directors may exchange one share of Cracker Barrel common stock for each outstanding right (other than rights owned by such person or group, which would have become void).

Prior to the acquisition by a person or group of beneficial ownership of 10% or more of the Company’s common stock, the rights are redeemable for one cent per right at the option of the Board of Directors.

Certain synthetic interests in securities created by derivative positions – whether or not such interests are considered to constitute beneficial ownership of the underlying common stock for reporting purposes under Regulation 13D of the Securities Exchange Act – are treated as beneficial ownership of the number of shares of the company’s common stock equivalent to the economic exposure created by the derivative position, to the extent actual shares of the company’s stock are directly or indirectly held by counterparties to the derivatives contracts. The dividend distribution will be made on October 3, 2011, payable to shareholders of record on that date, and is not taxable to Cracker Barrel shareholders.