MN Tile Shop To Go Public Through Merger
The Tile Shop, LLC, a Plymouth-based retailer of manufactured and natural stone tiles, has agreed to merge with a shell company in a move to go public.
Under the terms of the deal, The Tile Shop will combine with Boston-based JWC Acquisition Corporation under a new holding company, Tile Shop Holdings, the two companies announced Wednesday. The deal values The Tile Shop at $500 million, and the combined company will be based in Plymouth.
JWC Acquisition is a special purpose acquisition company (SPAC)—one that has no operations but exists as a shell public company with the intention of merging with or acquiring a private company to help it go public. The company’s common stock has been trading on the OTC Bulletin Board since 2010.
Once the deal closes, which is expected to occur in August, Tile Shop Holdings will apply to list its shares of common stock on the Nasdaq Stock Market under the symbol “TTS.”
The Tile Shop said the combination will give it greater access to capital to support future growth.
“This transaction marks the next step in The Tile Shop’s evolution into the leading North American specialty retailer of tile,” The Tile Shop CEO, founder, and co-owner Bob Rucker said in a statement. “As a public company, we not only will continue with our self-funded store growth across the country, but also be better positioned to take advantage of additional resources to accelerate our growth as the demand for our products increases.”
When the deal closes, Rucker, who is one of the owners of The Tile Shop, will hold a stake of approximately 18 percent of Tile Shop Holdings and will continue in his role as CEO. The rest of The Tile Shop’s current owners will collectively hold a 49 percent stake of the new company. Meanwhile, public shareholders of JWC Acquisition Corporation will hold a stake of approximately 29 percent, while the founders of JWC will own about 4 percent. The current owners of The Tile Shop will also receive a total of $100 million in cash and about $80 million in promissory notes under the terms of the deal.
Founded in 1985, The Tile Shop reported sales of $152.7 million in 2011, up 12.8 percent from $135.3 million in 2010. The company has about 61 stores in 20 states, including eight that opened this year. It plans to open an additional five stores this year and at least 15 stores in 2013. The company employs about 668, including roughly 100 in Minnesota.