By Dow Jones Business News,
January 29, 2014, 09:15:00 AM EDT
Sotheby's to Pay Special Dividend
Sotheby's said Wednesday it will pay shareholders a $300 million special dividend in March and may sell its New York
headquarters, as the auction house works to fend off an assault by activist hedge fund manager Daniel Loeb.
The company also said it may buy back $150 million in stock and is considering options for its Bond Street property in
The moves are the result of a financial review that began in September, a month before Mr. Loeb sent the company an
incendiary public letter calling on Chief Executive William Ruprecht to step down and saying the company was like "an
old master painting in desperate need of restoration."
The promises to return more cash to shareholders could help build support for management in that fight. The dividend
would amount to $4.34 a share, Sotheby's Chief Financial Officer Patrick McClymont said on a conference call to discuss
Mr. Loeb's Third Point Capital LLC has a 9.3% stake in Sotheby's. His isn't the only hedge fund that has piled into
the company. Last summer, months before Mr. Loeb sent his letter, Richard "Mick" McGuire's Marcato Capital Management LP
announced that it held a 6.6% stake in Sotheby's and said it planned to talk over some ideas with the company's
In October, Marcato discussed those ideas publicly, saying it wanted Sotheby's to sell its New York and London
properties and unlock the capital tied up in its financing operations. On Wednesday, Mr. McGuire said Sotheby's plan "is
a step in the right direction," but he believes the auction house can do more.
"Sotheby's can and should return a total of $1 billion of capital to shareholders within 12 months," Mr. McGuire said.
Sotheby's said Wednesday it plans to send unneeded cash to shareholders via an annual special dividend in the years
The auction house also said it is looking at a couple of options for its New York headquarters, including selling the
York Avenue site and relocating or selling part of the building and re-establishing itself in the remaining space. The
latter option could involve moving some employees that don't deal with clients out of New York City and into the suburbs
to free up space.
A bidding process is under way for the New York headquarters. Based on the first-round bids, an outright sale doesn't
look likely, the company said. A similar review will begin later in London.
"It's not a simple real estate financing decision," Mr. McClymont, the CFO, said in an interview. "From an operating
standpoint, we need space for auctions."
Mr. McClymont said the company traveled to meet investors after announcing the financial review in September, but
wouldn't discuss conversations or feedback from any of them.
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