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Loeb Target Sotheby’s Says It Will Review Capital, Policy

William F. Ruprecht
Sotheby's Chief Executive Officer and Chairman William F. Ruprecht. Source: Sotheby's via Bloomberg

Sept. 11 (Bloomberg) -- Sotheby’s, the auction house under pressure from investor Daniel Loeb to improve its returns, said in an e-mailed release today that it’s “conducting a thorough review of its capital allocation and financial policies.”

The board’s review will be ready early next year, the New York company said.

Bill Ruprecht, the chief executive officer who added the title of chairman in 2012, said Sotheby’s will look at using “incremental debt” to fund some operations, the value of its real estate and the cost of initiatives in the works or being contemplated.

“Each of these options present possible advantages disadvantages; all are complex,” Ruprecht said in the statement.

The company continues to consider buying back shares and increasing dividends, he said.

Loeb’s Third Point LLC took a 5.7 percent stake, according to an Aug. 26 filing with the U.S. Securities and Exchange Commission. The hedge-fund company “intends to engage in a dialogue with members of the board or management” that may relate “to potential changes of strategy and leadership,” the filing said.

The shares are up 43 percent this year, and were up 60 cents as 12:56 p.m. in New York. They remain below their high of $57.64, set in October 2007. The shares are up about 5 percent since Loeb’s stake was disclosed in a filing on Aug. 26.

Other activists with an eye on Sotheby’s include Trian Fund Management LP, the firm run by activist investor Nelson Peltz, with a 3 percent stake, and Marcato Capital Management LLC with more than a 6 percent stake accumulated in options and shares.

To contact the reporter on this story: Philip Boroff in New York at pboroff@bloomberg.net.

To contact the editor responsible for this story: Manuela Hoelterhoff in New York at mhoelterhoff@bloomberg.net.

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