At Home sale in jeopardy

A big roadblock has appeared in the sale of At Home Group to a private-equity company.  

As reported last week, the fast-growing value home-décor retailer has agreed to be acquired by Hellman & Friedman for $36 per share in an all-cash transaction valued at $2.8 billion. But in a letter to At Home’s board, CAS Investment Partners LLC — the retailer’s largest shareholder with about 17% of the company’s shares — said that it plans to vote against  the sale,  saying that while it looks like “a great deal for H&F, it represents a slap in the face to stockholders.”

CAS noted in the letter that the share price “grossly undervalues the company and deprives stockholders of anything resembling a fair premium.” CAS is looking for a more realistic valuation at $70 per share or more.

“We are writing to you today to underscore that CAS intends to vote against the transaction as currently structured,” Clifford A. Sosin, CAS founder and portfolio manager, wrote in the letter. “If necessary, we are also prepared to take steps to prevent a sale to Hellman & Friedman, LLC, under the present terms. Although this is not our preferred path, we will not sit idly by as the board tries to push through a sale that we believe grossly undervalues the company and deprives stockholders of anything resembling a fair premium.”

At Home’s proposed sale comes as the home sector is booming, with consumers expected to continue investing in their homes even as the pandemic eases. At Home's net sales in 2020 rose 27.3% to $1.7 billion, while comp sales rose 19.4%.   

In the letter, Sosin referenced the many improvements that have taken place at the retailer in recent years, including the company’s growing store footprint and larger customer base, which has increased its purchasing scale and corporate leverage. It also noted that many of At Home’s competitors have reduced their store footprints or permanently shuttered, including Pier 1, J.C. Penney and Bed Bath & Beyond.