What Happened to At Home Stock?

Today, At Home stock (HOME) is up nearly 16% to trade around the buyout price offered by private equity firm Hellman & Friedman for $2.8 billion. This deal takes the company private.

At Home is a large chain store featuring home decor products in the furniture, rugs, art and housewares sectors. Over the last five fiscal calendar years it has rapidly expanded its store count with 122 new locations added.

The deal

Recent events at at home stock have left you uncertain as to its fate. Since early May, the Texas-based retailer has been trying to go private through a leveraged buyout and shareholders have been voting on the deal ever since.

Few weeks ago, At Home announced it was in talks with private equity firm Hellman & Friedman about a potential merger. This prompted some of At Home's largest shareholders to voice their opposition to the deal. At first, CAS Investment Partners and Honest Capital said they wanted a higher price per share and the company didn't seek out better offers; however, after H&F increased their offer by one dollar, these shareholders no longer held any opposition.

At Home has officially announced its acquisition by Hellman & Friedman for $2.8 billion in cash. That amount represents a huge victory for At Home, who had been facing significant difficulties this past year as the COVID-19 pandemic made consumers hesitate to spend money on new furniture or decorations.

At Home has managed to turn things around and, as a result, has been on an impressive winning streak lately. Last year, its net sales rose 27% while also expanding its store base across the country.

The company had an impressive first quarter, with adjusted earnings of 21 cents per share and same-store sales growth exceeding analysts' estimates by 0.8%. Unfortunately, that wasn't enough to stop investors from taking a dive on today - shares fell 47.2% below their buyout price of $36 per share, marking the third straight quarter that HOME stock experienced double-digit percentage declines after posting strong earnings results.

Now, At Home has a new owner and investors should anticipate an uptick in shares if the deal closes as expected. However, it's unlikely to push At Home stock above its market average between now and when the transaction concludes.

The company’s outlook

Outlook's chief executive officer, David Erdmann, had high hopes that his company's diversification strategy would generate steady growth. In the mid-1990s, he acquired a company which manufactured filmy plastic used for food packaging, expanding their packaging portfolio. They also added information management services, warehousing, inventory control and order fulfillment into their offerings - helping them grow at a slower rate than their printing business had done previously; earnings rose around 60% year over year during this time period. Furthermore, sales experienced an uptick in the second quarter of 2000 which gave management confidence for the future.