Dan Loeb Appointed Sotheby's Board Seat After Ceding Legal Advise
The hedge fund activist Dan Loeb will be appointed a seat on the board of Sotheby's, after a seven month battle, avoiding a feared shareholder vote, which was set to challenge the direction of the 270 year old auction house. The move came after Donald Parsons, a Delaware judge rejected a request to delay Tuesday's meeting. The action showed that Sotheby's officials were preparing for a rough ride after Blackrock, another major shareholder, told Sotheby's top executives that Loeb would win the case.
Sotheby's management agreed to appoint the vocal shareholder Loeb who will join Harry Wilson a restructuring expert and Olivier Reza, a jeweller as part of the team of 15 board members.
After intense negotiation, the Third Point hedge fund chief will now be allowed to increase his stake in the company to 15 percent from the current 10 percent stake that he already owns. Loeb will now be in a strong position, if he can convince the others on the board to back him.
It is thought that with Loeb, as the largest shareholder in Sotheby’s will benefit, as management will be free to focus on its core business. The next few weeks will see Sotheby’s and major competitor Christie’s holding their important post-War and contemporary art auctions in New York. This is one of the main barometers in the art market.
Recently shares in Sotheby’s dropped, since the start of the power-struggle, which began last August, when Loeb disclosed he owned more than 5% of the company. Shares initially soared, but lost ground in 2014, falling way behind the S&P 500. Sotheby’s shares gained 3.25 percent Monday to close at $44.80. They are down about 15 percent this year.
CEO William F. Ruprecht stated, “We welcome our newest directors to the board and look forward to working with them, confident that we share the common goal of delivering the greatest value to Sotheby’s clients and shareholders,” Ruprecht added, “This agreement ensures that our focus is on the business and that we will benefit from five fresh voices and viewpoints.”
Photo: Popeye by Jeff Koons Courtesy Sotheby's