Tuesday, 31 March 2015
Last updated 15 hours ago
May 5 2014 | 2:45pm ET
On Friday, a Delaware judge handed Sotheby’s a sweeping victory in its battle with Third Point. But today, the hedge fund emerged as the clear winner in its battle with the auction house.
Sotheby’s said that it would give Third Point the three board seats it had sought and would effectively junk the poison pill it adopted at the start of the fight. That provision, which set a 10% ownership limit for activists while allowing passive investors to buy a 20% stake, had been upheld by a court on Friday.
Under the agreement, Third Point will be allowed to increase its 9.6% stake to 15%. Firm founder Daniel Loeb and two other Third Point nominees will join the auction house’s board, increasing its size to 15.
“As of today, we see ourselves not as Third Point nominees but as Sotheby’s directors, and we expect to work collaboratively with our fellow board members to enhance long-term value on behalf of all shareholders,” Loeb said.
Third Point has blasted Sotheby’s “chronically weak operating margins” and “entrenched” board, calling it “an Old Master painting in desperate need of restoration.” He has also called for the ouster of CEO William Ruprecht, who he says lacks “leadership and strategic vision.”
“We welcome our newest directors to the board and look forward to working with them, confident that we share the common goal of delivering the greatest value to Sotheby’s clients and shareholders,” Ruprecht said. “This agreement ensures that our focus is on the business and that we will benefit from five fresh voices and viewpoints.”
Sotheby’s had previously said that Loeb and his fellow dissident nominees, Olivier Reza and Harry Wilson, would “add no relevant expertise” to its board.
It is not clear what led to Sotheby’s capitulation. Third Point was widely expected to lose its bid for the three board seats at the annual meeting tomorrow. That meeting has now been postponed for a month.
On Friday, a Delaware Chancery Court judge refused Third Point’s request to delay that meeting and also said that the hedge fund was unlikely to win its legal case against Sotheby’s poison pill.
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