French tycoon buys Sotheby's for US$3.7bn

Brenda Watkins
June 20, 2019

Auction house Sotheby's has announced it has signed an agreement to be purchased by French-Israeli media mogul Patrick Drahi for £2.95 billion.

Drahi, France's ninth richest individual with an estimated net worth of $9.1 billion according to Forbes magazine, said that he was "honoured" that Sotheby's board had recommended to shareholders that they accept his offer. The offer represented a premium of 61% to Sotheby's closing price on Friday, and gives it a market capitalization of $2.6 billion.

The company has been listed on the New York Stock Exchange since 1988 but its 275-year history predates the existence of the Wall Street exchange by almost 50 years.

"Sotheby's is one of the most elegant and aspirational brands in the world", Drahi said. Before Monday the stock was down 11 per cent in the year to date.

The Sotheby's chief executive, Tad Smith, said the auction house's growth plans would be easier to achieve in a "flexible private environment".

In the world of art-house and auctions, Christie's and Sotheby's are not just rivals, but also occupy a major market-share. The acquisition may have a significant impact on the auction industry, as of now, Sotheby's and competitor Christie's are both in private hands.

ICC Cricket World Cup 2019
Sodhi, 26, appears to be in the frame for his World Cup debut, as the Black Caps weigh up playing two spinners to face the Proteas .

The art world has been a favorite in recent times for investors looking to make extra returns in a world of ultra-low interest rates, with the prices of many expensive works of art having steadily increased. Sotheby's second-biggest shareholder is Daniel Loeb's Third Point hedge fund.

Sotheby's stock prices had reached a record high past year, but have since dropped due to decreased revenues. In 1988, Sotheby's went public again and listed on the New York Stock Exchange.

The boutique advisory firm LionTree is serving as financial advisor to Sotheby's on the deal, while BNP Paribas and Morgan Stanley are acting as financial advisors to BidFair USA.

The family of Francois Pinault, founder of Paris-based luxury goods giant Kering SA, owns Christie's after first buying a 29.1% stake in the company from British billionaire Joe Lewis two decades ago.

The company moved from Wellington Street off the Strand in London, to New Bond Street in Mayfair early in the 20th century and with the move transitioned from being largely a seller of books, to a seller of art.

Among some of the famous items sold by Sotheby's, which was founded in London in 1744, are art collections of the late Duchess of Windsor, the personal collection of artist Andy Warhol, and Edvard Munch's "The Scream" in 2012.

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