Street Capitalist: Event Driven Value Investments

The Indy Star has a new article by Ted Evanoff about the merger between Steak N Shake (NYSE:SNS) and Western Sizzlin (NASDAQ:WEST):

If past takeover attempts by Steak n Shake’s new chairman and chief executive are any indication, the 75-year-old burger chain soon may be recast as a corporate raider.

Sardar Biglari, the young Texan who took control of the Indianapolis-based company last year, has quietly remade the cheeseburger purveyor into a holding company — a business whose business is owning other businesses.

It gives the 32-year-old chairman of Steak n Shake an open hand to invest what the company calls “surplus cash” in whatever strikes his interest. In the past, those interests have included failed efforts to take over the bartering exchange service ITEX Corp. and California-based Jack in the Box.

Biglari’s new plan for Steak n Shake was noted in an amendment to a loan agreement with Fifth Third Bank reported by the restaurant chain to the U.S. Securities and Exchange Commission.

Biglari himself can tap Steak n Shake for “up to $10 million of surplus cash to make investments of any lawful nature,” says the July 8 report filed with the SEC.

It’s also nice to see Kevin Byun get quoted, he’s one of the brightest fund managers that I’ve had the opportunity to meet:

Kevin Byun, managing director of Denali Investors, a New York investor that owns shares of Steak n Shake, said he expects the holding company strategy could pay off as investments begin to lift Steak n Shake’s stock value.

“I’m actually quite optimistic with the whole holding company framework,” Byun said. “He has the authority to make investments over a wide area that will be to the advantage of Steak n Shake shareholders.”

Armed and ready to raid? (IndyStar.com)

Read the full article, there are a number of different takes on the situation.

Be sure