CAS urges At Home investors to reject $37 a share take-private deal By Reuters


© Reuters.

By Svea Herbst-Bayliss

BOSTON (Reuters) – At Home Group (NYSE:) Inc’s largest investor, CAS Investment Partners LLC, is urging shareholders to join it in rejecting the home furnishing retailer’s proposed sale, arguing that even after this week’s price increase the offer remains far too low.

CAS, which owns 17% of At Home’s shares, said private equity firm Hellman & Friedman’s new offer to pay $37 a share, representing a $1 per share bump, is not nearly sufficient for a company valued at $2.4 billion and growing strongly as low mortgage rates and strong housing demand fuel home decorating.

CAS said a “reasonable take-out price” would be $70 a share.

At Home agreed to sell itself to H&F last month for $36 a share and said the deal included a 40-day “go shop” period to find other potential buyers. This week it said H&F raised its price and will start a tender offer to buy shares instead of letting shareholders vote on the proposed deal, in which a majority would be required for the deal to proceed.

“H&F’s original offer of $36 per share and its recently revised offer of $37 per share grossly undervalue the Company and deprive stockholders of meaningful value. We urge you to reject H&F’s insufficient tender offer,” CAS founder and portfolio manager Clifford Sosin wrote in a letter seen by Reuters. He added that certain other shareholders are also opposing the “insufficient, conflict-ridden deal.”

Representatives for At Home and H&F did not immediately respond to a request for comment.

The board of directors’ special committee is trying to “usher through a fire sale,” Sosin wrote, adding that it failed to conduct a thorough strategic review and did not consult key shareholders like CAS before “falling into H&F’s arms this spring.”

Since the deal was announced last month, the company’s stock has largely traded between $36 and $37. It closed at $36.76 on Thursday.

Sosin said At Home CEO Lee Bird, who guided some of the company’s recent strong growth, stands to make more than $100 million in connection with the deal. He also said Bird has been in talks with H&F since 2017, according to proxy materials, which might have dissuaded other potential buyers from bidding.

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