Sotheby’s Attracts Yet Another Activist in China’s Taikang Life

  • Taikang Life Insurance discloses 13.52% active stake
  • Taikang joins Third Point, Marcato, Shanda as key investor

Sotheby’s, the auction house with two U.S. activist shareholders among its top investors, now also has two influential Asian owners.

Taikang Life Insurance Co., whose chairman and chief executive officer, Chen Dongsheng, also is the founder and president of China Guardian Auctions Co., one of China’s largest auction houses, disclosed an active stake of 13.52 percent Wednesday and said it may seek board representation.

The Chinese insurer said in a regulatory filing that it had expressed support to Sotheby’s board and management for its broader strategic initiatives, “and provided suggestions regarding future director nominations.” Such nominations could include persons associated with Taikang, the insurer said.

Taikang’s filing follows a May disclosure that Singapore-based Sotheby’s shareholder Shanda Payment Holdings Ltd. is poised to increase its stake. Tianqiao Chen and Chrissy Qian Qian Luo, co-founders of Shanda, owner of 2 percent of Sotheby’s, received U.S. antitrust approval allowing them to purchase more shares.

Proxy Battle

Sotheby’s earlier fought a bitter proxy battle with activist Dan Loeb’s Third Point LLC. In May 2014, it settled, agreeing to appoint Loeb and his two nominees, Olivier Reza and Harry J. Wilson, to its board. Third Point was Sotheby’s largest shareholder until Wednesday’s filing, which shows that Taikang has overtaken the hedge fund.

Marcato Capital Management, the activist hedge fund run by Mick McGuire, has also amassed an active 9.7 percent stake. Billionaire trader and collector Steve Cohen’s Point72 Asset Management also recently built a 5.5 percent stake.

Taikang, Third Point, Marcato, Point72 and Shanda collectively own about 43 percent of Sotheby’s, based on the latest available disclosures. Shanda has also potentially upped its stake substantially from about 2 percent, based on the FTC clearance filing.

Sotheby’s has a market capitalization of $1.84 billion, and 11.4 million of its 58.6 million shares are sold short. Short sellers aim to profit from a declining stock by borrowing shares, selling them and then buying them back at a lower price.

The Federal Trade Commission said in May it had approved Shanda’s proposed ownership increase. Sotheby’s had said earlier that month that an investor it didn’t identify may increase its holding to as much as 10 percent, fueling speculation that the company could be acquired or taken private.

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