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05/25/2021

$2.8B Sale of At Home Runs Into Road Blocks

The $2.8 billion acquisition of home decor superstore At Home may be in trouble.
At Home store

CAS Investment Partners has filed a preliminary proxy statement with the Securities and Exchange Commission to solicit votes to oppose the sale to private equity firm Hellman & Friedman LLC, Chain Store Age reported. CAS is the largest shareholder of At Home.

CAS filed a letter to the At Home board opposing the acquisition, arguing the deal “grossly undervalues the company and deprives stockholders of anything resembling a fair premium.” The sale price of $2.8 billion places the value at $36 per share, which was a 17% premium of the company’s May 4 stock price of $30.67 before media speculation about an acquisition was published. CAS argues the value should be closer to $70 per share.

“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,” Clifford A. Sosin, founder and portfolio manager of CAS, said in a statement. “Our extensive analysis leads us to believe that a much more realistic valuation is $70 per share or more.”

CAS also made reference to a number of improvements at the retailer over the last few years. The timing of the acquisition also comes when the home decor sector is booming. In 2020, At Home reported a net sales increase of 23.7% to $1.7 billion, and comp sales rose 19.4%. Additionally, CAS noted that several competitors, including Pier 1, J.C. Penney and Bed Bath & Beyond, have reduced their store footprint or closed, boosting At Home’s position in the sector. 

“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.”

The deal was originally expected to close in the third quarter of 2021, but with new opposition, it’s unclear where the acquisition stands. 

See the full story at Chain Store Age.