The long-running battle between
) and Third Point LLC came to an end after the 270-year old
auction house announced yesterday that it is ready to let the
hedge fund company appoint three members to its board.
The company declared that it will expand its number of board
members to 15 from the previous count of 12 to accommodate the
additional members. Along with Daniel S. Loeb, who is the founder
of Third Point LLC, Olivier Reza and Harry J. Wilson, will join
Last year in October, Third Point which manages assets for
Third Point Reinsurance Ltd.
) wrote to Sotheby's expressing its concern about the company's
strategies and managerial practices. Moreover, Third Point asked
for a seat on the board of directors and demanded Sotheby's
present Chairman and CEO Bill Ruprecht to step down.
Concurrent with this, the hedge fund company also revealed
that it has increased its stake in the company to 9.3% from 5.7%
disclosed in August 2013, making it the largest shareholder in
Therefore, Sotheby's adopted a poison pill to protect itself
against hostile or any other takeover tactics. This shareholder
right plan will prevent any single owner to own more than 10%
stake (with certain exceptions) in the company.
However, under the new agreement between the two companies,
Sotheby's will terminate the one year poison pill. Further, the
agreement also facilitates the hedge fund company to raise its
stake in Sotheby's to 15%. In consideration, Third Point has
withdrawn its litigation against Sotheby's poison pill.
Of late, Sotheby's is witnessing persistently weak operating
margins and deteriorating market position against its arch-rival,
Christie's. Moreover, Sotheby's businesses have also been hurt by
the Internet retailers such as
) offering auctions on their websites.
Sotheby's exists in more-or-less a duopoly market, and thus
private firms or individuals have a keen interest in the company.
In the beginning of 2013, billionaire Nelson Peltz acquired a 3%
stake, while hedge fund manager Mark McGuire of Marcato Capital
Management bought a 6.6% stake in Sotheby's in August last year.
A revival in its market share and profit will be a lucrative
option for investors looking to takeover the auction house.
Sotheby's shares increased approximately 3.3% yesterday and
closed trade at $44.80. Currently, the company carries a Zacks
Rank #2 (Buy).
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