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September 23, 2011 4:27 PM

Firms Dine on Restaurant-Related Corporate Work

Posted by Brian Baxter

Several firms landed key roles this week for corporate clients in the food-service industry.

Lebanon, Tennessee–based restaurant and retail chain Cracker Barrel Old Country Store has adopted a shareholder rights plan in a bid to repel a move by its largest shareholder to seize a 49.9 percent stake in the company.

Wachtell, Lipton, Rosen & Katz and Tennessee's Bass Berry & Sims have been retained by Cracker Barrel, which operates about 600 stores that sell American-style food and homey knickknacks, in order to guard against a takeover by businessman Sardar Biglari, whose other holdings include the Steak 'n Shake and Western Sizzlin chains.

"We're trying to protect against the specific threat of a creeping acquisition of control," Cracker Barrel spokeswoman Julie Davis told The Am Law Daily on Friday. "This [plan] is shareholder-friendly and even though it's in place now, we're putting it up for a vote at our shareholder meeting in December to continue it for a three-year period."

Wachtell, of course, is no stranger to poison pill-related legal work. Founding partner Martin Lipton is credited with inventing the strategy, which helps corporate clients defend against hostile takeovers. Wachtell has been busy in recent months advising clients like AOL, Clorox, and Kodak, with the latter two having adopted poison pills of their own in order to squash any unfriendly offers.

Biglari, whose Biglari Holdings currently owns 9.3 percent of Cracker Barrel's outstanding common stock, is seeking election to the company's board of directors in order to wrest control of the chain from its current management. (Cracker Barrel's general counsel is N.B. Forrest Shoaf, while Biglari's top in-house lawyer is Kenneth Cooper.)

SEC filings by Cracker Barrel show that Steven Wolosky, a senior name partner at New York's Olshan Grundman Frome Rosenzweig & Wolosky, is advising Biglari. Wolosky has previously advised Biglari and other activist investors in proxy contests. He's currently working with Olshan Grundman corporate partner Michael Neidell on the Cracker Barrel proxy fight.

While the Cracker Barrell battle heats up, two restaurant chains did change hands this week. According to The Associated Press, Louisville-based Yum Brands has sold off A&W Restaurants and Long John Silver's, both of which the company put on the block earlier this year.

Mayer Brown corporate partners Frederick Thomas and Jodi Simala in Chicago are leading a team from the firm advising Yum, the world's largest operator of fast-food eateries and the owner of the KFC, Pizza Hut, and Taco Bell chains. Thomas's previous work for Yum includes leading a Mayer Brown team that advised the company on its $860 million bid to acquire China's Little Sheep Group earlier this year.

Mayer Brown handled Yum's $320 million acquisition in 2002 of the A&W and Long John Silver's chains, which account for about 1,630 of the 37,000 restaurants in Yum's portfolio. Terms of Yum's current sale of A&W and Long John Silver's to two separate groups of franchisees were not disclosed. (Yum's general counsel is Christian Campbell.)

LSJ Partners, a group composed of franchisees and other investors, will buy seafood-themed Long John Silver's. A&W, whose name comes from the initials of the company's two founders and which is probably best known for its root beer floats, is set to be sold to a group called A Great American Brand. Cincinnati-based Frost Brown Todd is advising both groups on their respective acquisitions of A&W and Long John Silver's.

The sale of the two chains is the latest in a series of deals over the past year and a half that has seen the ownership of several major U.S. restaurant chains change hands. Lawyers from Am Law 200 firms have feasted on some of the transactional work connected to those deals, which have involved such brands as Arby's, Burger King, California Pizza Kitchen, and the Hardee's and Carl's Jr. chains.

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