CAS Investment Partners oppose sale of At Home Group

PLANO, Texas — The largest shareholder of At Home Group stock, CAS Investment Partners, said it plans to oppose the proposed deal to take the retailer private because it believes the transaction grossly undervalues the company.

Earlier this month, Hellman & Friedman, a global private equity firm, offered to acquire At Home Group Inc., the home décor superstore, for an all-cash transaction valued at $2.8 billion dollars.

A letter from CAS Investment to the board of At Home Group stated, “We are writing to you today to underscore that CAS intends to vote against the transaction as currently structured. 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.”

CAS Investment Partners owns around 17% of the company’s shares and is urging the board to pursue amended terms that “accurately reflect the company’s promise and value creation potential.”

The letter to the board of At Home from CAS says the current valuation does not include the many improvements in recent years, including:
• Millions of consumers have discovered At Home based on unaided brand awareness increasing from 15% to 19% over the course of fiscal year 2021.
• The company’s Insider Perks loyalty program, which had zero members in August 2017, grew by approximately 2.6 million to approximately 9.1 million members over the course of fiscal year 2021.
• The company has gone from a non-existent e-commerce presence in fiscal year 2019 to a robust one that now enables customers to execute online purchases and arrange for in-store pick-up or direct delivery.
• The company has expanded its direct sourcing from practically no direct sourcing in fiscal 2018 to 15% at the end of fiscal 2020 to nearly 20% at the end of fiscal 2021, thereby driving hundreds of basis points of margin improvement on each item sourced directly while enhancing product quality.
• The company’s growing store footprint and larger customer base has increased its purchasing scale and corporate leverage.

Also in the letter, CAS stated, “All of these factors have led us to a clear conclusion: While this looks like a great deal for Hellman & Friedman, it represents a slap in the face to stockholders.” The shareholders are contending that a more realistic valuation of the company would be $70 per share or more.

The CAS stockholders also estimate that At Home’s stock could be worth more than $135 per share by the end of fiscal 2026, which is less than five years from now. And, they are requested that the board of At Home Group demonstrate a commitment to meaningful stockholder engagement and allow CAS to present its analysis and recommendations.

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