Third Point’s proxy battle to gain three board seats at Sothebys (NYSE:BID) gains support from activist hedge fund firm Marcato Capital Management LLC.
Sothebys (NYSE:BID)’s earlier promise to return $450 million to shareholders failed to appease activist investors.
A decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More
Third Point’s proxy war
In its regulatory filing with the Securities and Exchange Commission last month, activist hedge fund Third Point LLC revealed its stepped-up fight against Sothebys (NYSE:BID) by nominating three executives including its founder and chief executive officer Dan Loeb to the board of the international auction company.
The two other executives nominated by Third Point were Harry Wilson, the chairman and CEO of MAEVA Group LLC, a corporate turnaround and restructuring boutique; and Olivier Reza, the lead designer and head of House of Alexandre Reza, an internationally renowned luxury jeweler in Paris.
In its filing, Third Point stated that the entrenched directors of Sothebys (NYSE:BID) lack the fresh perspective required to overhaul its challenging operational structure and fix its cultural malaise.
Sothebys expressed disappointment
Sothebys (NYSE:BID) responded to Loeb on the company’s conference call, stating that Loeb was being unreasonable. Bill Ruprecht, Chairman, President and CEO of Sothebys expressed the company’s disappointment that Third Point had chosen to pass to nominee directors. The chairman emphasized that Sothebys made efforts to reach an agreement with Mr. Loeb.
Third Point, with a 9.5% stake, is the largest shareholder of Sothebys (NYSE:BID). It said the offer of international auction company Sothebys for a single seat in the board of directors is not enough to prevent the proxy contest. It emphasized in its regulatory filing last month that Sothebys is well aware of its request for numerous board seats to bring much-needed changes in the company.
Citing people familiar with the developments, Kelly Bit and Stephanie Ruhle of Bloomberg point out that Marcato Capital Management LLC, the $2.7 billion activist hedge fund firm run by Mick McGuire, plans to vote in support of Third Point LLC’s nominees for the Sotheby’s board. With 6.6% of Sothebys (NYSE:BID)’ shares, Marcato said there is over $1 billion in excess capital on New York-based Sothebys’ balance sheet that should be returned to shareholders.