At Home’s biggest shareholder formalizes opposition against sale

CAS Investments has filed a preliminary proxy statement with the SEC for use in soliciting votes in opposition to the sale of At Home Group to private-equity firm Hellman & Friedman LLC.

Earlier this month, the fast-growing, value home-décor retailer agreed to be acquired by Hellman & Friedman for $36 per share in an all-cash transaction valued at $2.8 billion. Last week, CAS, the largest shareholder of At Home with a 17% stake, sent a letter to the board outlining its opposition to the proposed deal. CAS said that the share price “grossly undervalues the company and deprives stockholders of anything resembling a fair premium.” It is looking for a more realistic valuation at $70 per share or more.

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. The company’s net sales in 2020 rose 27.3% to $1.7 billion, while comp sales rose 19.4%.

“CAS has made clear that it will not sit idly by as the board tries to push through a transaction that grossly undervalues At Home at just $36 per share,” said Clifford A. Sosin, founder and portfolio manager of CAS. “Our extensive analysis leads us to believe that a much more realistic valuation is $70 per share or more.”

In the letter last week, CSA referenced the improvements that have taken place at the home-décor retailer in recent years, including the company’s growing store footprint and larger customer base, which has increased its purchasing scale and corporate leverage.  The letter 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.

“While the board seems comfortable writing off At Home’s substantial business improvements and significant growth opportunities, we suspect that a critical mass of stockholders are not,” Soison stated on Monday. “We look forward to advocating for stockholders’ best interests and vigorously opposing what is a seemingly unjustifiable fire sale to H&F.”