The special meeting of Sotheby’s shareholders is taking place at the firm’s York Avenue offices on September 5.
They will vote on the proposed sale of the company to the media and telecoms entrepreneur and enthusiastic art collector who has offered $57 per share via his company BidFair USA, valuing the company at $3.7bn.
Sotheby’s pointed out that this represented a premium of 61% to the closing price on June 14, the day before it was announced that it had entered into an ‘Agreement and Plan of Merger’ with Bidfair.
As is often the case when large companies are sold, a number of shareholders expressed dissatisfaction on the deal and a group of four investors have filed lawsuits relating to the release of information about the terms of the deal and the company’s valuation.
Last week it emerged that the UK-based investment firm RWC Partners, which owns a 2.5% stake in Sotheby’s, has also expressed concerns about the sale process and the price of the deal.
According to the Financial Times, RWC has written to Sotheby’s to outline its view that Chinese life insurance firm Taikang Asset Management, the company’s largest shareholder with a stake of approximately 17%, should have been contacted for a counter bid as negotiations with Drahi were taking place. It also reports that, according to documents filed with US securities regulators, the independent board member designated by Taikang suggested the auction house could fetch close to $100 per share in a sale.
RWC also stated that a downward revision in earnings projections meant that the “the intrinsic value of Sotheby’s is significantly higher” than the management’s forecasts.
Back in June 2018, Sotheby’s shares climbed to almost $60 per share before falling back to around $34 per share at the time Dhahi’s bid was made public. The bounce caused since the announcement of the deal has led to a jump in Sotheby’s shareprice. At the close of trading on August 26 it stood at $58.10 – a figure above the level of Dhahi’s offer.
If shareholders vote to accept the offer next week, Sotheby’s will return to private ownership after 31 years as a public company trading on the New York Stock Exchange.
In a statement, Sotheby’s said: “As RWC was told in response to its letter, a close reading of the proxy shows that all questions raised are unfounded, and Sotheby’s Board of Directors continues to enthusiastically support the proposed merger with Patrick Drahi.”
At the time the deal was announced in June, Drahi said: “Sotheby’s is one of the most elegant and aspirational brands in the world. As a longtime client and lifetime admirer of the company, I am acquiring Sotheby’s together with my family.”
Sotheby’s CEO Tad Smith said: “Patrick Drahi is one of the most well-regarded entrepreneurs in the world... He has a long-term view and shares our brand vision for great client service and employing innovation to enhance the value of the company for clients and employees.”
He added the deal will mean Sotheby’s will be able to “accelerate the successful programme of growth initiatives… in a more flexible private environment”.