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Fighting Back: Sotheby’s New “Shareholder Protections” Plan Also Intended to Protect Management UPDATED


On Wednesday, Sotheby’s announced that it would comment on anti-management pressure from activist investor Dan Loeb “at an appropriate time.”

The “appropriate time” was 9:01 a.m. this morning, when this announcment hit my inbox.

Below is an excerpt from the so-called “Shareholder Rights Plan with Shareholder Protections” (and with “protections” for current management):

The Board of Directors of Sotheby’s today adopted a shareholder rights plan and declared a dividend distribution of one preferred share purchase right on each outstanding share of the Company’s common stock.

The Board adopted the rights plan in response to the recent rapid accumulations of significant portions of Sotheby’s outstanding common stock, including through the use of derivatives. It is intended to protect Sotheby’s and its shareholders from efforts to obtain control that are inconsistent with the best interests of the Company and its shareholders [emphasis added].

The rights plan…guards against coercive tactics to gain control without paying all shareholders a premium for that control.

The Wall Street Journal‘s Kelly Crow reports today that this “shareholder rights plan—more commonly known as a poison pill—…effectively blocks a single investor from buying more than 10% of its stock….Loeb’s firm increased its stake this week to 9.3%, making it Sotheby’s largest shareholder.”

Perhaps appropriate to this occasion, Sotheby’s has just announced that the monumental “Silver Car Crash (Double Disaster),” 1963, by Andy Warhol, will be the highlight of its Nov. 13 contemporary art sale:

Andy Warhol, "Silver Car Crash (Double Disaster),"  Presale estimate: in excess of $60 million Image Courtesy Thomas Ammann Fine Art AG

Andy Warhol, “Silver Car Crash (Double Disaster),” 1963
Presale estimate: in excess of $60 million
Image courtesy of Thomas Ammann Fine Art AG

The estimate of “in excess of $60 million” is calibrated just above Christie’s $35-55 million estimate for a highlight of its Nov. 12 contemporary sale—Jeff Koonsover-hyped “Balloon Dog (Orange),” consigned by Peter Brant:


Jeff Koons, “Balloon Dog, (Orange),” 1994-2000, on the grounds of Peter Brant’s Art Study Center
Photo by Lee Rosenbaum

Sotheby’s estimate for “Disaster” is also slightly higher than Christie’s estimate for Warhol’s “Coca Cola (3)”:

Andy Warhol, "Coca Cola (3)," 1962 Presale estimate: $40-60 million

Andy Warhol, “Coca Cola (3),” 1962
Christie’s presale estimate: $40-60 million

Estimates are only as good as the bidders in the room, online, on the phone, and in the auctioneer’s book. But given the unsettled situation at Sotheby’s, the competition this fall between the Big Two promises to be even more fierce and fraught than usual.

UPDATE: Loeb responds.

an ArtsJournal blog