Sotheby’s Adopts Poison Pill Defense Against Loeb

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Nov. 11 (Bloomberg) -- Oliver Chen, analyst at Citigroup Global Markets, examines the poison pill defense adopted by Sotheby’s against a possible hostile-takeover attempt by activist investor Dan Loeb. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

Sotheby's. what is the deal?

They are making money, things are good, what is the tension point?

It is a spectacular bid -- spectacular brand with further opportunity to shore up the revenue base.

One issue is that the revenue is quite volatile.

That contributes to the risk to the stock.

If you think about monetizing a portfolio, they have real estate holdings that could be monetized into cash and those accounts receivables could be monetized 300 billion or $400 billion.

The way you are describing it, these volatile revenue trends being subject to outside forces, would that not make more sense?

Wax in a way it should be, they are the only publicly traded art auction house it is a duopoly.

Option condition margins are coming down as they compete for the finer lots.

Is is not a good target for activists?

I understand the financial engineering argument, but dan loeb is pushing for a strategy revamp with the new leader.

There could be a major shift that unlocks return on equity in terms of incremental revenue streams.

They could have retail, they could have more real estate.

They made 17.6% per year.

Not bad.

Where is the board on this?

There is potential he going to be a proxy war in march, an opportunity for the board to change over, but the board has diversified.

We will see.

I feel like activists are adding a unique angle to the story.

Sotheby's has a real estate unit, do they not?

They do, they franchise the brand is part of the strategy.

What is interesting to me is the sotheby's christie's tension with the activist shareholder angle.

Similar to the real estate industry, which is not been disrupted by the internet.

No one thought we would be sitting here later talking about sub beazer christie's, yet these industries are incredibly resilient, they are so infrequent and expensive, with complicated transactions, there is a role for the intermediary in both.

They will have the watch auction in geneva tomorrow, $200,000, that is the romance of sotheby's. i am sure that mr.

Loeb does not want to lose the romance.

What does he want to do?

Lose the romance?

Cheap in the catalog?

There is a balance between the romance and the expansion of preference, because it is kind of a could to her auction house.

-- could share -- couture auction house.

Licensing revenues there, two percent of revenue material, that could however be off for a brand builder.

Could you come back soon on holiday shopping?

This text has been automatically generated. It may not be 100% accurate.


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