Tile Shop Moves to Delist from Nasdaq in Bid to Go Private

Tile Shop Holdings, Inc. is taking definitive steps to end its public market status. Shareholders have approved a multi-step stock split designed to facilitate the company's removal from the Nasdaq exchange and its deregistration as a public entity. The primary motivations are clear: to eliminate millions in annual compliance costs and operate free from the quarterly scrutiny of public investors.

The decision comes against a backdrop of recent operational challenges. The company's stock last traded unchanged at $6.52. Over the past year, its share price has fluctuated between a low of $4.62 and a high of $7.75.

Recent quarterly results highlight the pressures the business faces. For Q3 2025, revenue declined by 1.71 percent to $83.1 million. This followed a second quarter where net sales fell 3.4 percent and comparable store sales dropped 3.5 percent, a trend management attributed to lower customer traffic. Gross margins have also come under pressure.

A Complex Share Consolidation Mechanism

To achieve its goal of going private, Tile Shop’s shareholders first approved an amendment to the corporate charter authorizing a reverse stock split within a range of 1-for-2,000 to 1-for-4,000. The board subsequently set the final ratio at 1-for-3,000. This reverse split will be immediately followed by a forward split at a ratio of 3,000-for-1.

This intricate two-step process is a formal mechanism to drastically reduce the total number of shareholders of record. Achieving this threshold is a legal prerequisite for deregistering under U.S. securities laws. The company estimates it will save more than $2.4 million annually in reporting and compliance expenses once the process is complete, funds it intends to redirect into core business operations.

Should investors sell immediately? Or is it worth buying Tile Shop?

Direct Impact on Shareholders

The share consolidation strategy will affect investors in two distinct ways:

• Retail investors are cashed out: Shareholders holding fewer than 3,000 shares prior to the reverse split will receive a cash payment of $6.60 for each full share they own, effectively terminating their equity stake in the company.
• Larger holders remain invested: Investors holding 3,000 or more shares will see no net change to their share count following the combined reverse and forward split, leaving their proportional ownership mathematically unchanged.

This targeted cash-out of smaller shareholders is a critical component of simplifying the shareholder base to meet deregistration requirements.

Valuation Concerns and Strategic Rationale

The move to delist has drawn commentary from institutional investors. White Brook Capital Partners disclosed it sold its position in Tile Shop following the delisting announcement. While the firm agreed with the strategic logic of going private, it viewed the $6.60 per-share cash-out price as significantly below its estimate of the company's intrinsic value.

An independent analysis from November 2025 noted that the equity was trading substantially above its estimated fair value and that losses had mounted over the preceding five-year period. This persistent gap between market valuation and operational performance underscores management's desire to escape the short-term reporting pressures of the public market. The planned deregistration is positioned as a move to grant Tile Shop greater strategic flexibility for a long-term turnaround, unimpeded by quarterly market expectations.