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.”