* Biglari in takeover battle for Cracker Barrel
* Biglari does not admit wrongdoing
* Biglari had 17.5 percent of Cracker Barrel in early Sept
WASHINGTON, Sept 25 Biglari Holdings Inc,
run by activist investor Sardar Biglari, will pay a $850,000
penalty to settle charges it violated merger reporting rules
when it bought shares of Cracker Barrel Old Country Store Inc
, the U.S. Justice Department said on Tuesday.
A proposed settlement between the company, which owns Steak
'n Shake and Western Sizzlin restaurants, and the government was
filed in federal court in Washington, the government said. The
Justice Department filed the complaint on behalf of the Federal
Cracker Barrel is in the midst of a takeover struggle with
Biglari, who last year wrote to Cracker Barrel stockholders,
saying the company had failed to live up to its potential under
the present board. Biglari Holdings had a 17.5 percent stake in
Cracker Barrel as of early September.
The FTC said in the government's complaint that Biglari
owned 100 shares of Cracker Barrel on May 23, 2011, and acquired
more shares in late May to mid-June until it held more than $66
million worth of Cracker Barrel shares.
Biglari disclosed the purchase to the Securities and
Exchange Commission but did not file with the FTC, which works
with the Justice Department to enforce antitrust law, the
Under U.S. law, stock purchases over a certain size must be
reported to antitrust regulators to ensure they comply with
antitrust law. Exceptions are made for passive investments, and
the FTC argued that Biglari intended to be an active investor.
The FTC said in its complaint that Biglari telephoned
Cracker Barrel's chief executive in late June 2011 and said that
he had ideas to improve Cracker Barrel's business and asked that
he and another Biglari associate be named to Cracker Barrel's
board of directors. Cracker Barrel declined.
In the settlement, Biglari Holdings did not admit liability.
In April, Cracker Barrel adopted a poison pill to guard
against Biglari's attempts to increase his stake.
The company noted the ongoing dispute in its reaction to the
settlement, saying, "Our concerns about Mr. Biglari's intentions
are underscored by the finding that Biglari Holdings violated
the Hart-Scott-Rodino Act (regulating filings on share
purchases) in connection with its acquisition of Cracker Barrel
Biglari has indicated that he intends to nominate himself
and an associate to the Cracker Barrel board at a Nov. 15 board
meeting, Cracker Barrel said in early September.
Biglari Holdings did not respond to requests for comment.
In April, the company adopted a poison pill to guard against
Biglari's attempts to increase his stake.
Cracker Barrel, which is based in Lebanon, Tennessee, runs
country-themed restaurants and gift shops mostly along U.S.