Auctions Fairs Market USA

Loeb battle costs Sotheby’s $15.7m

The auction house announces the outcome of its costly seven-month battle with hedge fund Third Point

Picasso’s Le Sauvetage, 1932, sold for $31.5m (with premium; est $14m-$18m) at Sotheby’s last night

New York. The seven-month battle with the “activist investor” Dan Loeb and his hedge fund Third Point cost Sotheby’s $5.7m in advisory and legal fees in its first quarter, the company announced in a conference call to shareholders on Wednesday. Additional charges of around $10m for the reimbursement of Third Point’s expenses are expected in the second quarter as part of the settlement announced on Monday, which resulted in Loeb gaining three seats on the auction house’s board.

It also emerged during the conference call that Sotheby’s plans to focus on the middle market—works priced between $50,000 and $3m, which generate more than 40% of the auction house’s annual revenues—rather than continuing to compete with Christie’s for everything the top end, regardless of margins. “It is the bell-curve for the company, where the property we handle is more abundant than $30m paintings [and] price negotiations are minimal against our fees,” said Bill Ruprecht, the firm’s chairman, president and chief executive.

Sotheby’s will continue to focus on its financial services business, “which has been on a very significant growth trajectory”, Ruprecht said. As of 30 April, Sotheby’s loan portfolio was around $572m—a 21% increase from year-end.

In dismaying news for dealers, Sotheby’s plans to further develop its private sales and gallery business, which “has grown 30% year-on-year for the past five years… to roughly approximate 20% of our global commerce”, Ruprecht said.

Correction, 9 May 2014: This article was updated to clarify Sotheby's middle market strategy.

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9 May 14
18:4 CET


Sotheby's are losing it

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