Third Point Sues To Sink Sotheby’s Poison Pill

Mar 26 2014 | 1:36pm ET

Third Point has nominated three candidates the Sotheby’s board of directors, and it would like to improve their chances of winning.

The New York-based activist hedge fund filed suit against the auction house yesterday, seeking to have its poison pill provision invalidated. Sotheby’s adopted the measure, which bars non-passive investors from buying more than 10% of the company’s shares, in October, in response to Third Point’s initial approach. The hedge fund owns a 9.6% stake in Sotheby’s.

Third Point chief Daniel Loeb blasted the move as “a relic from the 1980s” at the time, and now says it is something more serious: “an improper attempt by the directors of Sotheby’s to entrench themselves in office and to hinder Third Point’s or any other stockholder’s ability to run an effect proxy contest,” the hedge fund said in its lawsuit.

Third Point has blasted Sotheby’s “chronically weak operating margins” and called on the company to increase its focus on modern and contemporary art. It has also demanded the ouster of CEO William Ruprecht. Loeb nominated himself and two others for election to the Sotheby’s board last month. The three were dismissed by Sotheby’s earlier this month.

Sotheby’s defended its poison bill, calling the board’s decisions “to adopt and maintain the 12-month rights plan are both valid and legal. The plan is designed to limit the ability of any person or group to seize control of the company without appropriately compensating all Sotheby’s shareholders.”

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...