Sotheby’s to Purchase $73.8 Million in Shares From Marcato

  • Auctioneer’s third-largest holder to sell 2.05 million shares
  • Marcato among activists who pushed for change at Sotheby’s

Sotheby’s plans to purchase $73.8 million of stock from Marcato Capital Management, the activist hedge fund that’s the company’s third-largest shareholder.

The auction house agreed to buy up to 2.05 million shares, according to a regulatory filing Tuesday. Marcato owned 5.27 million Sotheby’s shares as of June 30. That represented a 9.6 percent stake and was Marcato’s second-biggest investment by market value.

Marcato first disclosed its stake as an activist investor in Sotheby’s in July 2013 when the shares traded above $40. The hedge fund’s founder, Mick McGuire, was joined by Daniel Loeb’s Third Point, which disclosed its holding in August 2013. Loeb fought a bruising proxy battle at the auction house and in May 2014 the company agreed to appoint him and his two nominees, Olivier Reza and Harry J. Wilson, to its board.

Sotheby’s is up almost 45 percent this year. The stock fell 1.2 percent to $37.08 at 2:06 p.m. in New York. Marcato declined to comment Tuesday.

Taikang Stake

Sotheby’s said Tuesday that the board approved a $75 million increase to its existing share repurchase authorization. About $40 million remains of the total $400 million authorized, according to its filing.

In July, China’s Taikang Insurance Group revealed that it owned about 14 percent of Sotheby’s to become the company’s largest shareholder. Chairman and Chief Executive Officer Chen Dongsheng is also the founder and president of one of China Guardian, one of the country’s largest auction houses.

Last month, Sotheby’s and Taikang agreed to begin a search for an independent director for Sotheby’s. The shareholder will not seek to increase its stake until Nov. 6, or team up with other investors, as long as the search is ongoing, the companies said in filings.

In August, Sotheby’s rallied the most in more than four years as lower costs, improved commission margins and a jump in Asian art sales fueled higher earnings.

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