Wednesday, 1 October 2014
Last updated 11 hours ago
Apr 1 2014 | 12:18pm ET
A judge sounded sympathetic to Third Point’s plight in its battle with Sotheby’s, but warned that the hedge fund remains at a clear disadvantage.
Delaware Vice Chancellor Donald Parsons yesterday fast-tracked the hedge fund’s lawsuit against the auction house, which seeks to invalidate Sotheby’s poison-pill provision. The company adopted the measure in October, barring Third Point or any other activist investor from buying more than 10% of its stock.
That distinction warrants a hearing before Sotheby’s May 6 annual meeting, at which Third Point hopes to oust three directors, Parsons said.
“Here we have an uncommon rights plan that on its face discriminates between activist and passive investors,” the judge said. “It is sufficiently possible that the board is attempting to tilt the playing field for proxy contests in its favor and make for an unfair fight.”
Sotheby’s countered that it is Third Point that is trying to tilt the playing field. “It is clear to us that Third Point, concerned that it will fail to convince shareholders at the ballot box, filed its complaint in an apparent last-minute attempt to buy additional votes,” Sotheby’s said. “Third Point has made no case that change is warranted at Sotheby’s, and its nominees add no relevant skills or experience not already effectively represented on the Sotheby’s board.”
Sympathies aside, Parsons said that proving the poison pill puts Third Point at a disadvantage will be an “uphill battle.”
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.
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