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Loeb and allies to join Sotheby’s board as deal brings a truce

12 May 2014Written by ATG Reporter

The protagonists in the battle over the future of Sotheby’s have called a truce, with both sides conceding points.

Hedge Fund billionaire Daniel Loeb is to get a seat on the board along with two of his nominees, and Sotheby's have agreed to remove the 'poison pill' shareholder rights manoeuvre issued to hamper attempts by Loeb's company Third Point to acquire more stock in the company, although Third Point have reportedly agreed for this to be capped at 15%.

However, the Loeb nominees will not replace existing directors and the board will expand to 15 members.

The deal also sees chairman and chief executive Bill Ruprecht, who had faced repeated attempts by Loeb to oust him, remain in office.

The deal came a day before the annual shareholder meeting (now opened and then postponed), which was due to elect/re-elect directors - and after weeks of vigorous lobbying over proxy votes in a hard-hitting campaign by both sides to secure support from key investors over the elections.

Accommodation Found

It is thought that deal came about for a number of reasons. On the one hand it appeared unlikely that Third Point would succeed in their legal challenge to the 'poison pill' in time for the shareholders' meeting, while on the other a clear win for Sotheby's existing board via the proxy vote was in no way certain.

There were also reports of dissatisfaction among existing directors.

The effect on the share price and the potential long-term damage to reputations risked by such a protracted and public spat would doubtless have also concentrated minds, especially as it has all been such a distraction from the business of auctioneering and private treaty sales.

It's a point set in stark relief by the start of the flagship fortnight of Impressionist, Modern and Contemporary art sales in New York.

Mr Loeb's two nominees for the board are former investment banker Olivier Reza, who is also a jewellery designer, having revived the business started by his father Alexandre, and Harry Wilson, a noted restructuring expert.

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