Mergers & Acquisitions

Sotheby’s in Deal With Drahi to Go Private

The $3.7 billion transaction values Sotheby's at $57 per share, a premium of 61% to last week's closing share price.
Vincent RyanJune 17, 2019

Sotheby’s, the famed auction house, announced it has signed an agreement to be acquired by BidFair USA for $57 per share in cash, a premium of 61% to the company’s closing share price on Friday and a 56% premium to the company’s 30-day volume-weighted average share price.

BidFair is wholly owned by French billionaire art collector Patrick Drahi.

In a statement, Drahi said he was making the acquisition “for my family, through my personal holding, with a very long-term perspective.” He said there was no capital link with his telecommunications companies, Altice USA and Altice Europe.

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The deal, valued at $3.7 billion, comes as auction houses have faced high overhead costs and decreasing margins, despite the red-hot global market for art. Sotheby’s is the last major auction house to be publicly traded and is the oldest company on the New York Stock Exchange. Sotheby’s main rival, Christie’s, went private in 1998.

Some market observers have said being a private company gives Christie’s an advantage in flexibility and being able to take risks. In a press release, Sotheby’s Chief Executive Officer Tad Smith said, “This acquisition will provide Sotheby’s with the opportunity to accelerate the successful program of growth initiatives of the past several years in a more flexible private environment.”

Activist investor Daniel Loeb’s Third Point owned 14.3% of Sotheby’s as of May 10, making it the company’s second-largest shareholder.

About five years ago Sotheby’s ended a long-running fight with Loeb’s hedge fund by asking Loeb and two associates to join Sotheby’s board.

The price “affirms the value we saw when we first invested in Sotheby’s, and rewards long-term investors like Third Point who believed in its potential,” Loeb told Reuters.

The transaction is expected to close in the fourth quarter of 2019, subject to shareholder and regulatory approval.  Sotheby’s said the deal was not subject to the availability of financing.

The company’s stock had fallen 40% from record highs over the past year.

The auction house’s sale does not include Sotheby’s International Realty – a separate enterprise that has been a subsidiary of real estate company Realogy Holdings since 2004.