For a hefty per-share premium of $57—or $3.7 billion in total, 275-year-old Sotheby's becomes the latest public company slipping into private hands.
French-Israeli media tycoon Patrick Drahi agreed to buy the New York-listed auction house through his holding company, BidFair USA, ending Sotheby's 31-year run as a public company.
Rival Christie’s was bought by another French investor, luxury-goods magnate Francois-Henri Pinault who paid for the British auction house $1.2 billion in 1998. And London-based Bonhams, one of the three oldest and largest auctioneers of fine art and antiques in the world, is private too.
(Sotheby's auction Photo: Courtesy of Sotheby's)
Who is new Sotheby’s owner Patrick Drahi?
Drahi, a noted art collector, owning works by Pablo Picasso, Henri Matisse and Eugène Delacroix, is the founder and Chairman of Altice Europe, a multinational telecoms and mass media company, listed on the Euronext Amsterdam stock exchange. Its American counterpart, Altice USA, debuted on the NYSE in 2017.
The self-made businessman was born in Casablanca in 1963 to two math teachers, moved to France when he was 15 and graduated from the École Polytechnique university in Paris with a postgraduate degree in optics and electronics. He started his career at Philips where he was in charge of international marketing in the cable and satellite division. He then moved to a subsidiary of cable giant Liberty Global before deciding to create his own telecoms empire.
He also owns France's second-biggest mobile phone operator SFR , several French media houses including BFM news channel and Liberation newspaper, Israel’s international i24 News network and Portugal Telecom. In 2015 he entered the American market by snapping up cable company Suddenlink in a $9 billion deal and the next year Cablevision for $17.7 billion. Recently, he acquired Cheddar, an American online-only financial video news startup for $200 million.
Drahi, a French citizen, who also holds Israeli and Portuguese citizenship, currently lives in Switzerland and ranks 190th on the 2019 Forbes list of billionaires, with an estimated net worth of $9.4 billion.
"If you want to be successful, work hard, have fun and above all, listen and do not talk too much," French news magazine Obs quoted him as saying.
The Wall Street Journal reported that Drahi sees art as a refuge from the day-to-day stresses of corporate battle.
"Known for his commitment to innovation and ingenuity, Patrick founded and leads some of the most successful telecommunications, media and digital companies in the world," Tad Smith, Sotheby's CEO, said in the statement. "This acquisition will provide Sotheby's with the opportunity to accelerate the successful program of growth initiatives of the past several years in a more flexible private environment," Smith added.
(Drawing of a book sale in progress at Messrs Sotheby, Wilkinson & Hodge of Wellington Street, the Strand, conducted by the Chairman, E.G. Hodge, with Bernard Quaritch and other booksellers in attendance. Source: Bonhams)
The art of a deal
Drahi, is scooping up Sotheby’s for $57 a share, representing a 61% premium to the company's closing price on Friday June 14, 2019, and a 56.3% premium to the company’s 30-trading-day volume-weighted average share price.
He is also taking on the company’s more than $1 billion in debt, bringing the total enterprise value of the deal to $3.7 billion. The news sent Sotheby’s shares-which trade on the New York Stock Exchange under the ticker symbol “BID”- rocketing by 58% to $56.10 in early trades on Monday (June 17).
The famed auction house's stock price was down 40 percent in the last 12 months (prior to Monday's go-private deal) because revenue has slumped. The deal, which is subject to regulatory and shareholder approval, is slated to close in the fourth quarter.
"Sotheby's is one of the most elegant and aspirational brands in the world. As a longtime client and lifetime admirer of the company, I am acquiring Sotheby's together with my family," Drahi said.
To fund the acquisition, he said he secured financing from French bank BNP Paribas.
(Photo: Sotheby's Headquarters in New York. Looking northeast across York Avenue and 71st Street at w:Sotheby's at 1334 York Avenue on a cloudy midday Photo credit: Jim Henderson)
The world's oldest and largest international auction house
Sotheby's was established on 11 March 1744 in London and expanded overseas in the 20th century. It moved to New York in 1955, opened offices in Paris and Los Angeles in 1967, became the first auction house to operate in Hong Kong in 1973, and Moscow in 1988. Today it has 80 offices around the world, with its headquarters in New York.
The art broker was public in the UK in 1977 before it was bought by American shopping-mall tycoon A. Alfred Taubman, in 1983, who took it public again in 1988. In 2013, activist investor Daniel Loeb took a stake in the company. The deal with Drahi represents a $125m profit for Loeb's Third Point hedge fund.
Loeb praised Drahi's new acquisition, telling Reuters that the price "affirms the value we saw when we first invested in Sotheby's, and rewards long-term investors like Third Point who believed in its potential".
In July 2016, Chinese insurance company Taikang Life became Sotheby's largest shareholder with a 13.5 percent stake.
Last year, the auction house banked $109m in profits on revenues of a little over a billion dollars. According to the Wall Street Journal, New York-based Sotheby’s sold $6.4 billion in art in 2018, up 16 percent from the previous year. Around $220.4 million of that was sold online.
The house holds a number of world records for auctioned works of art. A version of Edvard Munch's painting The Scream, was sold for US$119 million in 2012 and Pablo Picasso's Dora Maar au Chat was sold for $95 million in 2006, becoming the second most expensive artwork ever sold at auction at that time.
Among other famous items sold by Sotheby's is the personal collection of artist Andy Warhol and art collections of the late Duchess of Windsor.
Drahi's acquisition comes amid signs that the art market is booming again. Last month, Sotheby's sold one of Claude Monet's "Meules" (Haystacks) series for $110.7 million, which the company said was an auction record for an impressionist painting. In 2018, the auction house handled the year's most expensive painting, Amedeo Modigliani's Nu couché, which sold for $157.2 million. Looks like prices fetched by artworks at auction soar.