Wynnefield Capital, Inc. v. Tile Shop Holdings, Inc.

This is a developing situation. Tile Shop (TTS) was trading for around $3 until the company announced plans to de-register with the SEC, suspend its dividend, and cancel its share buybacks. The share price crashed by 2/3rds as a result.

They have been sued by a shareholder who claims that this was a deliberate scheme to take over the company at a fire sale price:
The board of directors of a Delaware corporation has a fundamental duty and obligation to “protect the corporation enterprise,” and to defend stockholders “from harm reasonably perceived, irrespective of its source.” This case involves a board that is purposely letting half of its members – including the known repeat fraudster who founded the company – buy a controlling stake in the company through open market purchases at depressed prices, without paying a fair price, much less a control premium. Instead of adopting a poison pill or taking other defensive measures to protect public stockholders in the face of a change of control transaction executed in the open market, this board helped turn a slowly developing creeping takeover into a modern street sweep.
The company is temporarily enjoined from deregistering, and some think that the stock is interesting at the current price. The complaint filed in Delaware court is posted below.


  1. Rucker just quit the board, is angry, and wants everyone to know about it.


    While I believe there is plenty to criticize the Rucker for, what he is saying is consistent with other publicly available info. I know there has been accusations that the company's new-ish CEO isn't qualified, so the allegation that Livingston is really making all the important decisions is at least plausible.


  2. On February 12, 2020, Mr. Robert A. Rucker submitted his resignation from the board of directors of Tile Shop Holdings, Inc. (the “Company”). Mr. Rucker subsequently confirmed on the same date that his resignation was effective immediately. Mr. Rucker effected his resignation from the board pursuant to the letter attached hereto as Exhibit 17.1.

    Prior to his resignation, Mr. Rucker served as interim CEO of the Company from October 2017 until January 2019, and thereafter as a consultant to the Company. In those roles, Mr. Rucker maintained an office at the Company’s headquarters and was involved with the Company’s operations. The Company’s board of directors recently determined that Mr. Rucker’s role in operations was no longer necessary and therefore that it was no longer necessary for Mr. Rucker to maintain an office at the Company’s headquarters or maintain an active role in the Company’s operations.

    On February 19, 2020, Mr. Rucker delivered a follow-up letter to the Company further explaining and clarifying his disagreements with the Company. A copy of Mr. Rucker’s follow-up letter is attached hereto as Exhibit 17.2.

    The Company respects and appreciates Mr. Rucker’s efforts as a founder of the Company, his many years of service to the Company, and his role and achievements in connection with building the Company’s business.