Western Sizzlin is in the process of executing a reverse merger with Steak n Shake. The name of the thread will be changed when that transaction has been completed.
While the primary business of Western Sizzlin Corporation (stock symbol: WEST) is franchising and operating restaurants, in recent years it has been restructured into a holding company that is focused on taking equity positions (and possibly control) of public entities that are selling below their intrinsic business values.
The CEO and controlling shareholder of WEST is Sardar Biglari, a self-described value investor in the mold of Warren Buffett and Benjamin Graham. Only 31 years old, Mr. Biglari holds a 35% interest in WEST through The Lion Fund L.P., a private investment partnership. Mr. Biglari is the general partner of The Lion Fund L.P., which is probably best described as a hedge fund. Working in conjunction with The Lion Fund, WEST has taken positions in a several public companies that were perceived to be selling below their intrinsic values. Mr. Biglari has actively worked, not always with a lot of tact, to pressure the management groups of these public companies to unlock the value in their companies.
In 2007, WEST and its affiliates began acquiring shares of Steak n Shake (stock symbol: [t]SNS[/t] (<span style='font-size:11px'>LAST</span>: 348.26<span style='font-size:11px'> 2/19/2010 3:58:37 PM</span>) (<span style='font-size:11px'>LAST</span>: 348.26<span style='font-size:11px'> 2/19/2010 3:58:37 PM</span>) (<span style='font-size:11px'>LAST</span>: 14.55<span style='font-size:11px'> 12/18/2009 5:12:20 PM</span>) (<span style='font-size:11px'>LAST</span>: 14.55<span style='font-size:11px'> 12/18/2009 5:12:20 PM</span>) (<span style='font-size:11px'>LAST</span>: 14.55<span style='font-size:11px'> 12/18/2009 5:12:20 PM</span>) (<span style='font-size:11px'>LAST</span>: 14.55<span style='font-size:11px'> 12/18/2009 5:12:20 PM</span>) ), eventually assembling 3,755,725 shares, equal to a 13.1% position in the company. In February 2008, Biglari launched a proxy fight to replace the Board of Directors and was successful in placing two people, including himself, on the Board. He became Chairman of the Board of SNS in June 2008 and its Chief Executive Officer in August 2008. Biglari subsequently restructured SNS as a holding company and announced that the company would implement a business model similar to the WEST business model.
On October 22, 2009, WEST and SNS announced that they had signed a merger agreement, pursuant to which WEST will merge into SNS in a transaction valued at $13.67 per WEST share. As part of the transaction, WEST distributed the 1,322,806 SNS shares that it owned to its shareholders, who will additionally receive debentures valued at $8.08 per share when the transaction closes.
On December 14, 2009, SNS announced that its shares would be reverse split on a 1-for-20 basis, effective with the close of business on December 18, 2009. The resersesplit will reduce the liquidity of the stock, which is the whole purpose. Biglari is interested in attracting long term inmvestors to the company, not short term traders.
Western Sizzlin SEC filings
Steak n Shake SEC filings
Steak n Shake website |
