Jack In The Box Adopts ‘Poison Pill’ To Thwart Biglari’s Stake Buildup

Jack in the Box (JACK) said on Wednesday it has adopted a ‘poison pill’ plan effective immediately after activist investor Sardar Biglari’s hedge fund amassed 9.9% of the fast-food chain’s stock.

Jack in the Box shares jumped 7.4% during midday trading. The stock has lost more than half of its value year-to-date.

Public companies adopt the ‘poison pill’ plan or shareholder rights plan to avoid hostile takeovers. Biglari Capital Corp. privately informed the company that it now owns 9.9% of the shares and intends to increase its stake, the fast-food chain said in a statement.

Biglari, who chairs Biglari Holdings (BH), oversees a portfolio that includes Steak ‘n Shake, Western Sizzlin, and several other ventures, while Biglari Capital is a wholly-owned subsidiary of the parent company.

Jack in the Box added that it was issuing one right for each outstanding share, and the rights plan will generally become exercisable only if a person or group has acquired 12.5% or more of the stock.

Any person or group who currently owns more than the stated percentage may continue to own shares of the company’s common stock, but will not be able to acquire any additional shares in the future without triggering the rights plan, it said.

The fast-food chain noted that if the rights become exercisable, all holders of rights except for the group or person triggering the plan will be entitled to buy shares at a 50% discount to the then-current market price.

On Stocktwits, the retail sentiment for Jack in the Box was in ‘bullish’ territory, compared to the ‘neutral’ sentiment over the past week.

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