Photo by Lee Rosenbaum
Might history repeat itself?
Sotheby’s, which appears to have already anticipated a hostile takeover attempt by making changes in management and by reexamining financial strategies, yesterday issued a non-response to the harshly worded letter from activist investor Dan Loeb of Third Point LLC, who wants the auction house’s long-time CEO, William Ruprecht, to leave the building. Loeb also wants seats on Sotheby’s board for himself and other like-minded new directors.
The hedge fund manager’s jump-the-gun letter also states:
There are at least two internal candidates for the CEO position who warrant serious consideration. We have already begun informal discussions with outside candidates and would welcome the opportunity to bring the internal candidates into a formal process.
In yesterday’s terse statement, Sotheby’s blasted as “incendiary and baseless” Loeb’s allegations regarding the auction house’s “lack of expense discipline,” “waste” and “lackadaisical corporate culture.” But it didn’t tip its hand as to what it might do next, saying only that it would “comment on the communication from Third Point at the appropriate time.”
Those of us with long art-market memories know how Sotheby’s attempted to deflect a previous attack by activist investors: It happened in 1982, when Stephen Swid and Marshall Cogan, co-partners of General Felt Industries, a New Jersey manufacturer of carpeting and Knoll furniture, amassed 14.2% of Sotheby’s stock shares and sought to dictate changes intended to improve financial performance.
In a strategy that it could conceivably try again, Sotheby’s fended off Loeb’s precursors by finding a “white knight” to purchase Swid’s and Cogan’s shares and execute a takeover regarded more favorably by Sotheby’s management.
That knight-in-tarnished-armor, who went on to become Sotheby’s chairman, was A. Alfred Taubman.
Although past is not necessarily prologue, we all know how that turned out.