The fight for control of Sothebys (NYSE:BID) board was brutal and long. Ultimately Daniel Loeb, manager of the hedge fund Third Point, was granted three board seats. However, today it appears as Loeb may not be achieving his ultimate objective.
Dan Loeb aggressively campaigned for ouster of Sothebys management
When he fought for influence over the venerable auction house Sothebys (NYSE:BID), Loeb and aggressively campaigned for ouster of management and the board of directors, which he said were filled with cronies and incompetence. Today, however, Loeb is joining hands with the board of directors, singing kumbaya and supporting existing management.
According to a New York Times report, Domenico De Sole, the company’s lead independent director, wrote in a letter to employees that the directors stood behind current CEO William Ruprecht. The letter was signed by the entire board including Loeb and his two allies on the board, corporate restructuring expert Harry Wilson and Olivier Reza, an investment banker and scion of a jewelry fortune.
Loeb and Ruprecht’s previous clash
As previously noted in ValueWalk, Loeb and Ruprecht had previously clashed. An avid art collector, Loeb was quoted as comparing Ruprecht to “old master painting in desperate need of restoration” as he campaigned to have the auction house’s chief executive replaced.
In a “he said, she said” political campaign, Third Point released a 30 page presentation that outlines Loeb’s essential arguments – much of which is re-iteration that can be found in the fund’s previously slick media presentations. The presentation directly attacked standing board members Robert Taubman, Daniel Meyer and Jessica Bibliowicz, saying they have “limited qualifications” and likely won’t “add value for Sothebys (NYSE:BID) shareholders.”
“Management’s claim that 2013 was a ‘record’ year is misleading and demonstrates the risk of having a Board asleep at the switch,” Loeb wrote, as he pointed to statistics that can be found on his web site.
These old hatchets will now be buried as the group moves forward to boost the share value of one of the world’s most venerable auction houses. Who knows? Perhaps Loeb can engineer an acquisition or two with Sothebys (NYSE:BID) as the buyer and involve Loeb in the acquisition in the same fashion William Ackman worked with Valeant on the Allergan acquisition. That would be a real dream deal.
Below is the text of the memo sent on behalf of Sotheby’s board via NYTimes:
Sotheby’s newly-elected Board of Directors, including our five new members, met last week in New York. During two days of meetings, the Board discussed strategy, operations, challenges and opportunities. We focused on Sotheby’s core mission — serving our clients — and shared ideas for strengthening our business.
We value your continued commitment to Sotheby’s. Your efforts have produced strong results in most of our businesses and the Company is off to a record start this year. The Board stands behind the management team led by Bill Ruprecht, and is committed to supporting your efforts and providing additional resources, where necessary, to realize our shared goals.
After our constructive and collaborative start, the Board is looking forward to meeting again in August. We are excited about the future of the global art market and focused on improvements to realize Sotheby’s full potential in a highly competitive marketplace. We welcome your ideas during this exciting time.
Domenico De Sole, Lead Independent Director
Duke of Devonshire