Sotheby’s board of directors have moved to counter increasing pressure for change from investor Daniel Loeb by issuing shareholders with new rights to acquire company stock.
On October 4 they announced that they were
adopting a shareholder rights plan and declared a dividend
distribution of one preferred share purchase right on each
outstanding share of the company's common stock.
What this means is that shareholders will
earn the right to double their holding by buying new stock in the
company if any person or group acquires a 10% stake in the
"It is intended to protect Sotheby's and its
shareholders from efforts to obtain control that are inconsistent
with the best interests of the company and its shareholders," said
The move cannot prevent a complete takeover
of the company, but it would make it far more expensive to do
The board further explained that the rights
plan provides several recognised shareholder protections:
• expires automatically in 12 months unless
approved by shareholders (in which case it will expire in three
• has an exception for offers made for all
shares of the company that treat all shareholders equally and that
result in the bidder owning a majority of the company's shares
after 100 days;
• guards against coercive tactics to gain
control without paying all shareholders a premium for that control;
• facilitates the ability of all
shareholders to realise the full long-term value of their
investment in the company.
The move comes after Mr Loeb's Third Point hedge fund upped its
stake in Sotheby's to 9.3% at the end of last month and he called
on Bill Ruprecht to stand down as chief executive and chairman,
citing a "crisis of leadership".