CORRECTED-UPDATE 1-Top shareholder Biglari considering Cracker Barrel bid

Tue Dec 24, 2013 2:15pm EST

(Removes reference to Steak 'n Shake and Western Sizzlin restaurants in paragraph 2)

Dec 24 (Reuters) - Cracker Barrel Old Country Store Inc's top shareholder, Sardar Biglari, said he was considering a bid for the restaurant chain, the activist investor's latest attempt to take control of the company.

Sardar Biglari, through his investment firm Biglari Holdings , has been pushing for change at Cracker Barrel for more than two years, saying the company's "earning power" was far too low under the current management.

Biglari Holdings, which holds a 19.9 percent stake in Cracker Barrel, said on Tuesday it was in talks with an investment bank to finance a deal.

Cracker Barrel's shares rose 1 percent in early trading.

Sardar Biglari's latest attempt in November to win board seats was rebuffed by Cracker Barrel's shareholders at the annual meeting. They also rejected his proposal for a $20 per share special dividend.

Biglari last week sent a letter to the Cracker Barrel's board, urging a review of options including a sale.(r.reuters.com/sen55v)

In Tuesday's letter, Biglari said he was willing to lead a sale process by submitting a bid, but did not give details.

He also sought support for his efforts to seek an amendment to Tennessee's tough anti-takeover laws, which discourage unfriendly takeovers.

A Cracker Barrel spokesperson declined to comment.

Biglari also said he would consider selling his stake if the company began a share repurchase.

If the Cracker Barrel board does not agree to his terms, the investor said he would call for a special meeting of shareholders to push for the sale.

Cracker Barrel shares were trading up less than one percent at $111 on the Nasdaq on Friday. They have risen 72 percent this year to their Monday close, outpacing the broader S&P 500 index which is up only 28 percent.

Biglari Holdings shares were unchanged at $511.03 on the New York Stock Exchange.

(Reporting by Aditi Shrivastava and Siddharth Cavale; Editing by Sriraj Kalluvila)