Dive Brief:

• At Home's largest shareholder, CAS Investment Partners, on Sunday sent a letter to the retailer's board opposing the sale to private equity firm Hellman & Friedman. The retailer said at the time the deal was announced it expects it to close in the third quarter this year.

• CAS, which owns about 17% of At Home's common stock, said the deal "grossly undervalues the Company and deprives stockholders of anything resembling a fair premium," according to the letter. At Home did not immediately respond to a request for comment from Retail Dive. 

• The retailer in early May entered into a deal to be acquired for $36 a share. CAS in its letter said that "while this looks like a great deal for H&F, it represents a slap in the face to stockholders," suggesting "a more realistic valuation" would be at least $70 a share.

Dive Insight:

At Home's deal earlier this month to sell itself to Hellman & Friedman for $2.8 billion comes as the home sector of retail has been experiencing sales boosts since the start of the pandemic.

As life suddenly began to revolve much more around the home, many consumers began to invest in their personal spaces to make their "new normals" of working and schooling remotely more comfortable.

But that boom is also what CAS is using to bolster its argument that the deal undervalues the retailer.

Its letter outlined several factors that have benefited the retailer's position this past year: At Home has built out its e-commerce presence, "millions" of customers have discovered the retailer based on brand awareness increasing from 15% to 19% last year, its loyalty program experienced substantial growth and many of its competitors — including J.C. Penney, Pier 1 and Bed Bath & Beyond — have either shuttered completely or reduced their footprints, among other things.

At Home's net sales this past year rose 27.3% to $1.7 billion from $1.4 billion a year earlier, while its comp sales increased 19.4% from a decline of 1.7% the prior year.

Upon entering the agreement to be acquired by Hellman & Friedman, the retailer began a 40-day "go-shop" period in which it could solicit alternative acquisition proposals from additional parties.

"It seems as if the Board made no legitimate effort to try to find another bidder or strategic partner that could pay a viable premium," CAS founder and portfolio manager Clifford Sosin said in the letter, later adding that "if our concerns continue [to] fall on deaf ears and the terms of the proposed transaction are not promptly amended, we are prepared to take action to oppose the deal."