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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 company.

"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 board.

The move cannot prevent a complete takeover of the company, but it would make it far more expensive to do so.

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 years);

• 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; and

• 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".